By Harry Floudopoulos
The legislative regulation, which will impose the famous ceiling on the wholesale electricity market and which will be submitted in the form of an amendment to the parliament in one of the next government bills, should be considered complete. The aim is to start the operation of the temporary regime for the control of electricity prices.
The regulation provides for the application of an extraordinary and temporary compensation mechanism for power plants for the quantities of electricity available on the market through the energy exchange.
The mechanism is scheduled to become operational on 1 July and will last for a maximum of one year thereafter, in July 2023. In addition to the amendment, the implementation of the new market operation mechanism will require the issuance of a number of regulatory decisions that will specify a number of issues such as the height of the ceiling, the way of clearing the transactions in the energy exchange and the formation of the maximum compensation prices of the production units per technology.
Price reduction
Through the mechanism, the goal is to achieve the goal of reducing the price per kilowatt hour for consumers. In combination with the subsidies of 3.2 billion. The retail price of electricity is expected to fall to the level of 0.145 euros per kilowatt hour from the levels of 0.23 euros per kilowatt hour currently included, including subsidies. Without subsidies, the price per kilowatt hour exceeds 0.33 euros per kilowatt hour.
How it will work
The new mechanism that will determine the operation of the wholesale electricity market, is expected to set compensation ceilings for electricity producers, which will vary depending on the technology of electricity generation. For the gas and lignite plant there is no fixed maximum price and this will be determined by a number of parameters, such as fuel cost. Thus, for example, in determining the maximum price of gas units, the TTF market price of natural gas, the price of carbon dioxide emissions and factors such as the efficiency of the unit will be taken into account. With the current gas prices, the maximum compensation price for these units is set at the levels of 220 to 230 euros per megawatt hour. Respectively for the lignite units will be taken into account the cost of CO2 rights but also the efficiency of the unit in order to determine the ceiling.
For the green RES units, on the contrary, there will be a specific price which according to information will be determined at the levels of 86 to 88 euros per megawatt hour. For hydroelectric power plants, for which PPC is very interested, the ceiling is expected to be set at 100 euros per megawatt hour.
The ceiling mechanism will work as follows: the wholesale price of electricity will be normally formed on the energy exchange based on the offers of the generators, however then the stock exchange will withhold the resulting amounts as the difference between the market price of electricity and the maximum price per technology. The amount raised will be transferred to the Energy Transition Fund, which together with the resources from the state budget will finance the subsidies to consumers.
Source: Capital
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