The new operating model of the electricity market proposed by Greece

By Haris Fludopoulos

The two Greek proposals to provide incentives to industries to reduce consumption and to establish a new mechanism in the electricity market that will decouple electricity prices from natural gas will be presented to the Council of Energy Ministers by the responsible minister K. Skrekas.

As Mr. Skrekas pointed out, coming to the council, “we will analyze the proposal of the Greek Prime Minister K. Mitsotakis for a new demand reduction mechanism that will give the appropriate incentives to energy-intensive industries to reduce gas consumption. We will also present the Greek proposal for a new pan-European operating model of the electricity market that will better calculate the real cost of electricity, decoupling the price of natural gas from electricity prices and thus ensuring sustainable prices for small and medium-sized enterprises and households”.

According to Bloomberg, the Greek plan foresees that the energy produced by RES, hydroelectric and nuclear will be separated into a pool which will be billed separately from the energy produced by natural gas and other fossil fuels which will be billed in a separate pool . The proposal means that revenue for clean energy will fall, reflecting lower production costs. This could ensure lower prices for over 50% of energy given that natural gas covers about a third of the energy mix, a percentage that will continue to decline as the energy transition accelerates.

According to the Greek proposal, the first reservoir will supply about two-thirds of the demand at a lower cost while the second reservoir will cover the rest of the demand, reducing the overall cost of electricity. The average cost of electricity generation will decrease by up to 60% compared to the current market price according to the Greek government’s estimate.

The Greek proposal was distributed to the member states before the meeting of the energy ministers, who are asked to agree on the emergency plan for the reduction of natural gas consumption as well as for the future energy supplies of the EU.

Powerful message

As Mr. Skrekas emphasized coming to the meeting, the council will send a strong message of unity and solidarity against Russian blackmail. “We are confident that we will reach a regulation that will better serve the needs and specificities of the member states that will help us to reduce the consumption of natural gas and thus reduce energy dependence on Russian gas,” said Mr. Skrekas.

“If we manage to put all the specificities of the member states together I think we can agree on a regulation that will serve the main objective of reducing gas consumption in a way that will not jeopardize the social cohesion and the production base of Europe and on the other hand, it will reduce energy dependence on Russian gas” said Mr. Skrekas, expressing the belief that the ministers are very close to an agreement on “a very good text”.