State-controlled Public Power Corporation (PPC) will double its lignite-fired electricity generation in the next 12 months to reach 10 GWh, compared to 5 GWh at present, in order to cover about 20 % of Greece’s annual electricity demand.
This decision is effectively reversing the country’s decarbonization plan in order to circumvent the effects of a possible Russian gas supply halt and surging natural gas prices on the European market. The Government’s decision also includes development of new lignite mines in the future.
Greek Government recently introduced price caps for electricity generation, based on the production type. Price cap of 208 euros/MWh has been imposed on lignite-fired electricity production, meaning the additional 5 TWh that will be produced by PPC will be worth roughly one billion euros. On the other hand, this additional 5 TWh would have been worth 1.8 billion euros if current energy exchange price levels were applied. The wholesale cost of lignite-generated electricity is currently 341.17 euros/MWh.
PPC, controlling all the country’s lignite-fired generation capacities, has set a series of conditions for the return of lignite-fired power plants, including the abolishment of a rule requiring the company to commit 50 % of the previous year’s lignite-based output to the futures market.
It also demanded a 150 million euros guarantee from the Government should Russia’s war in Ukraine end and energy prices deescalate, which would end the need for the emergency lignite- fired production increase.
