The Greek government accepted a request from solar power producers, deciding to provide remuneration at zero hourly prices in the day-ahead market (DAM).
Under the current regulatory framework, when prices are zero or lower for at least two consecutive hours, solar power producers with contracts for difference (CfDs) don’t get paid. Given the conditions in the market now, it means they are looking at a 60% loss of income, leading to the risk of bankruptcies.
Faced with this threat, the Ministry of Environment and Energy decided that from June 1, renewable energy producers will be remunerated when the price is zero. They will not receive payment when it becomes negative.
Greece had 242 hours with negative prices this year
According to the ministry, so far this year there were 203 hours at zero and 242 hours with negative prices. This phenomenon happens in countries with a high solar penetration.
Producers will also gain a five-year extension of their CfD contracts to support their long-term commercial viability.
Solar associations remain unconvinced
The solar energy market received the new plan with mixed reactions. Associations said it is a positive step, but that it would not solve the underlying problem completely.
Small producers association SPAF-HELIOS pointed out that the state still moves very slowly with developing energy storage.
The Panhellenic Federation of Photovoltaic Producers (POSPIEF) responded that prices in CfDs have to be raised to avoid economic damage.
The Hellenic Association of Photovoltaic Energy Producers (SPEF) said it expects more hours with negative prices in the day-ahead market, so that the issue would not go away.
Aggregators managing portfolios that consist of renewable electricity plants with CfDs may take advantage of the new measure by submitting sell offers at zero or positive prices, so that their clients are remunerated. In this case, there will be oversupply from other participants, as a large part of their own portfolio will remain off the market, and they will have to curtail it, explained SPEF Chairman Stelios Loumakis.
On the other hand, verticalized companies or groups with power purchase agreements (PPAs) can make sell offers from their renewables portfolios at negative prices – since they are not affected – and leave the portfolios with zero and positive offers outside of the day-ahead market, he added.
The question of the missing money for solar support
The new measures would not affect price formation in the wholesale market, meaning that consumers will not have to shoulder the extra cost directly. However, a new deficit is expected in the special renewables account, managed by the Operator of Renewable Energy Sources and Guarantees of Origin (DAPEEP).
The Greek government will now have to come up with the money, expected to reach EUR 100 million to EUR 150 million, to cover new remunerations.
DAPEEP’s account can theoretically improve its income by raising the special renewable energy surcharge in consumers’ power bills.
The alternative would be to raise the share that renewables receive from the carbon allowances market, currently set at 9%. In this case, support for other green programs, such as electric cars, would have to be lowered.
In theory, Greece could make use of the extra 0.3% of GDP per year in budgetary allowance that the European Commission provided recently, as part of the response to the energy crisis. The administration in Brussels said it has to be used to support green programs, such as new renewable energy projects, electric mobility and energy efficiency. Based on previous experience, it will not be allowed to cover deficits, even for renewables.
Under this scenario, the government could direct some of that money to other categories of the carbon allowances market and then take it back indirectly to provide it to DAPEEP.
