Greek power futures liquidity hits high in 4Q22
Greek power futures liquidity on the European energy exchange EEX increased in December, bringing exchanged volumes in the last quarter to their highest in 2022.
Exchanged volumes totalled 221GWh last month, some 21GWh higher compared with traded volumes in November. This brought exchanged volumes in the fourth quarter to 645GWh, some 294GWh higher compared to the third quarter and at their highest quarterly total in 2022.
Volumes remained at a deficit to 2021, though narrowing to a 481GWh deficit in December from 1.1TWh in November. Despite the narrower deficit in December, volumes in the fourth quarter of 2022 were 8.9TWh below liquidity for the same period in 2021.
The Greek government introduced a new legislation at the end of August which obliges power suppliers to announce their retail power prices for the next month on the 20th day of each calendar month. This exposes suppliers to the risk of estimating inaccurate prices, thus increasing their hedging for the month ahead and supporting higher market liquidity, market participants told Argus.
The Greek month-ahead contract was the most liquid in the fourth quarter, with exchanged volumes totalling 505GWh. Argus will launch daily assessments of the Greek and the Bulgarian month-ahead contracts today.
The 2023 calendar contract also gathered interest during the fourth quarter, with volumes totalling nearly 53GWh, supported by yearly cross-border capacity auctions on the Jao platform in November and December. In the Greek-Italian borders, both directions sold at their highest ever price for 2023, with Italy-Greece selling at nearly four times the cost for 2022.
Despite their increase in the fourth quarter, Greek futures liquidity was significantly below 2021 levels, with total exchanged volumes in 2022 reaching around 2TWh, from 16.6TWh a year earlier. High initial margin payments, market volatility and regulatory uncertainty have weighed on the decreasing market liquidity in 2022, market participants have previously told Argus.
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French power sector braces for change ahead of election
French power sector braces for change ahead of election
Paris, 4 July (Argus) — The outcome of the French parliamentary election on Sunday could bring reforms that will impact the country's power industry, causing mixed reactions among market participants. The far-right National Rally (RN) and its allies gathered 33pc of votes in the first round of the French legislative election on 30 June, placing it ahead of the coalition of left-wing parties, the New Popular Front (NFP), and the current government's Ensemble coalition. But energy agendas strongly differ across the three political groups, creating a climate of uncertainty in the French power sector, especially as those programmes were put together in a rush after Emmanuel Macron called a surprise snap election, and they will probably need some fine-tuning. Divide over the renewable line On the topic of wind farms, the RN has reiterated its proposal to halt the construction of new wind projects, which could put at risk the achievement of French renewable targets. Despite the halt of new projects, RN leader Jordan Bardella in the party's last press conference said he does not plan to "stop all variable sources of energy", adding that wind farms currently in operation would not be dismantled. He also mentioned an ambition to "recreate a French solar PV [photovoltaic] industry" and to protect it by raising tariffs on the European level. But the party did not respond to Argus on the specifics of its programme. The NFP intends to develop both offshore wind and tidal energy, and has called for a vote on an "energy and climate law". And the current government has raised solar PV targets in its updated national energy and climate plan (NECP), in addition to raising the offshore wind goal to 45GW by 2050. "The pressure on public support mechanisms for renewable development would depend on the next majority in parliament," director of power and PPA advisory at consultancy firm Greensolver, Alexandre Soroko, told Argus . "It could change the way in which renewable energy projects under development generate their revenues and finance their development. If the pressure is increased, it would probably have a bigger impact on wind projects than on solar PV ones." Other market participants told Argus they expect delays in permitting processes if RN wins the election. Parliament last year passed the "renewable acceleration law", to speed up permitting processes that are longer in France than in neighbouring countries. A boost to nuclear energy The RN plans to strengthen the French nuclear fleet with a massive investment programme, making it the pillar of the French energy mix, while NFP's position is not clear on the matter. RN aims to increase French nuclear capacity through the construction of European pressurised reactors (EPRs) paired with small modular reactors (SMRs) and fast-neutron reactors. This plan echoes Emmanuel Macron's recent pledge to build 14 EPRs of type 2 reactors by 2050, with three pairs already planned . In contrast, the topic of nuclear reactor construction has been absent from the NFP's programme as views on it diverge among participants in the union, mostly between green party Les Ecologistes, which has been traditionally against nuclear energy, and the communist faction. An exit of the European power market? Criticising the rules of the European power market has been a recurring discourse on the French political scene. Bardella said he wanted a "French power price, that corresponds to the costs of nuclear production", while far left La France Insoumise (LFI), which is part of the NFP group, opposed the EU power market design reform in April. During the Europ'Energies conference this week, energy consumers association CLEEE's president Frank Roubanovitch said he was "favourable to the idea supported by RN and LFI of ending the marginal pricing mechanism while maintaining physical interconnections". But an exit of the European market would mean a "not optimal use of transmission infrastructure", according to European Commission team leader on the internal energy market, Mathilde Lallemand. Points of convergence Nuclear power, a protection of current hydropower concessions and the conversion of coal-fired plants to biomass are topics that are found in both the RN and Ensemble agendas. Although the RN plans to invest into hydropower plants to increase their production capacity, it is strongly opposed to the introduction of competition to the hydropower concessions system. The latter was mentioned in the draft energy sovereignty proposal unveiled by the government in February, but was never introduced to parliament. The RN party also wants to phase out coal and convert coal-fired plants to biomass — an ambition announced by Emmanuel Macron for 2027 at the end of 2023 . The second round of the elections is planned for 7 July. By Tatiana Serova Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Fire-hit biomass plant in Japan to start up in 2025
Fire-hit biomass plant in Japan to start up in 2025
Tokyo, 3 July (Argus) — Japan's 75MW Sodegaura biomass-fired power plant, operated by Osaka Gas, will begin commercial operations around April-September 2025, following delays caused by a silo fire in January 2023. The fire at the Sodegaura plant in Chiba prefecture happened during test runs, and Osaka Gas said on 3 July that the cause was the combustion of wood pellets stored for more than six months in two silos. The company has now put in place measures to reduce the risk of fires, including a nitrogen injection system that can prevent temperature increases. Other measures include bringing pellets out of silos to lower their temperature every three months or so, with the exact duration depending on the season and other conditions. The plant was initially supposed to begin commercial operations by the end of February 2023, but start-up was delayed by the fire. Osaka Gas only managed to put the fire out completely in May 2023. The company finished removing all remaining pellets from the silos in April this year — the pellets had absorbed sprayed water and swelled. By Takeshi Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Washington advances carbon market linkage plans
Washington advances carbon market linkage plans
Houston, 2 July (Argus) — Washington regulators are moving forward with plans to further align the state's cap-and-trade program with the California-Quebec carbon market. The state Department of Ecology has released for public comment two draft rules related to holding limits, biofuel emissions and electricity imports that are intended to smooth the way for linkage ahead of formal discussions with California and Quebec regulators that could kick-off next year. The first draft rule, issued on Monday, would revise general cap-and-trade program mechanics, such as raising the holding limit for allowances issued each year for general market participants to 25pc from 10pc should the programs link. It would also revise emissions exemption for biofuels, recently authorized by state lawmakers, of 30pc lower greenhouse gas (GHG) emissions than comparable petroleum fuels and allow Ecology to add an exemption standard used by a linked program, for a two-part standard. Washington set the ball rolling on its ambition to link with the Western Climate Initiative (WCI) partners California and Quebec last year in hopes that creating a larger North American carbon market will help reduce compliance costs. The state legislature authorized Ecology to make the changes in legislation adopted earlier this year . The program costs became a significant issue last year, when Washington Carbon Allowances (WCAs) rose as high as $70/metric tonne (t) in the secondary market. California and Quebec agreed in March to explore adding Washington to the WCI, but progress is unlikely to happen this year as California regulators first focus on updating the state's cap-and-trade program. In the interim, Ecology said it is still considering other amendments that could help with linkage, including moving the state's compliance periods, which run on a four-year cycle, to the three-year cycle used in the linked market. But California and Quebec are considering shifting their compliance periods to either four years or two years for 2026-2030, and then to either five years or alternating between three-year and two-year periods after 2030 to align with their respective statutory targets, which Ecology will have to take into account. Washington has set a target to cut GHG emissions by 45pc by 2030 compared with 1990 levels, and reach net-zero emissions by 2050. The program cap-and-trade program covers industrial facilities, power plants, natural gas suppliers, and other fuel suppliers with emissions of at least 25,000 t/yr. Ecology is accepting feedback on its linkage rulemaking through 27 September, with a public meeting set for 10 July. Imports and reports In a separate rulemaking announced last week, the state is considering expanding reporting requirements and covered emissions under the program to included imported electricity from centralized electricity markets (CEM). The state is required under its Climate Commitment Act to adopt a methodology for imported electricity by 1 October 2026. The proposed amendments would come into play in 2027, allowing regulators to assign GHG emissions to imports of electricity from CEM and for the state to better understand how the imports may affect its climate goals. Under the proposed amendments, regulators would increase allocations of no-cost allowances to electric utilities. The state issues no-cost allowances to electric and natural gas utilities, and industrial entities, to mitigate the cost of decarbonization. Electric utilities must consign an increasing portion of these allowances to state auction starting in 2027 and must use this revenue for projects to benefit customers through projects like energy transition billing credits. Regulators estimate that bringing CEM importers under the cap-and-trade program will result in an aggregated annual compliance cost of around $7mn-$119mn, depending on allowance prices, which regulators expect will fall as emissions declines outweigh imports over time, according to a preliminary regulatory analysis released last month. The proposed changes reflect estimates last year by the state Department of Commerce that 43pc of the state's electricity supply by 2050 will come from imports, driven by Washington moving its electricity away from fossil fuels to renewables sourced from within and outside the state to meet the goal of decarbonizing the state's grid by 2045. Ecology will accept feedback on its proposed rules for imported electricity through 20 August, with final adoption planned in December. By Denise Cathey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
French EdF develops more nuclear supply contracts
French EdF develops more nuclear supply contracts
Paris, 2 July (Argus) — French state-owned utility EdF has signed five letters of intent for long-term nuclear supply contracts for power-intensive industries, EdF executive director Marc Benayoun said at the Europ'Energies conference in Paris today. The five nuclear power supply contracts represent over 10 TWh/yr of consumption and will last for at least 10 years. Payment will be upfront. "We are still far from the [24TWh] maximum that we were aiming for but, in a context of low prices, some actors prefer medium-term contracts", Benayoun said. The utility had signed three letters of intent for nuclear power supply contracts as of April, including one with steel manufacturer Arcellor Mittal and another with green iron consortium GravitHy . French nuclear power supply contracts — or CAPNs — are designed for power-intensive industries, defined by the share of energy expenses in their revenue. French state-owned rail company SNCF consumes an average of 9 TWh/yr of power so does not fall under the power-intensive category, making it ineligible for a CAPN. Discussions on widening the scope of CAPNs have been ongoing with EdF, SNCF operations director Khadidja Haned Bouaddou told Argus . Nuclear supply contracts will partly replace France's Arenh scheme, under which EdF is obliged to sell nuclear power at a fixed price to competitors. The Arenh mechanism is due to expire at the end of next year. The French state reached a deal with EdF at the end of last year that sets a price for nuclear power sales, but the agreement has not yet become law. The prices of the contracts could be renegotiated, French economy minister Bruno Le Maire said recently. France's current parliamentary elections add further uncertainty to the future of the mechanism. EdF has concluded 2,000 contracts for around 40TWh, or 11.7 TWh/yr, of power over 4-5 years, with the power coming not only from its nuclear fleet. This compares with the 20TWh of power that the utility had sold as of the beginning of April . In parallel, the utility is conducting pay-as-clear auctions for delivery in 2028-29, offering 1-5MW. But the auction has not cleared, as prices have decreased and bids received by EdF were below its reserve price, Benayoun said. Power-intensive industries union Uniden president Nicolas de Warren welcomed the initiative of the auctions and said they represent a complementary source of supply. By Tatiana Serova Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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