Energy Markets June, 2020 Kostas Andriosopoulos Professor in - - PowerPoint PPT Presentation

Energy Markets

June, 2020 Kostas Andriosopoulos

Professor in Finance and Energy Economics, ESCP Business School

ABOUT MYSELF

Academia:

• ESCP Europe Business School:
• Professor, Finance and Energy Economics
• Director, Research Centre for Energy Management (www.rcem.eu)
• Academic Director, Full-time and Executive Masters in Energy Management
• Visiting lecturer: Cass Business School (UK), AUEB (GR), EDI (NL), ESA (LB).

Industry:

• Vice-Chairman of BoD, Greek Public Gas Corporation (DEPA Group)
• CEO, Akuo Energy Greece (subsidiary of Akuo Energy)
• Board member (International Expert), Global Gas Centre – World Energy Council
• Former Vice President (Publications), International Assocation for Energy Economics (IAEE)
• Former founding Chairman, Hellenic Association for Energy Economics (official affiliate of the IAEE)
• Former co-founder and Partner, Symmetria Web Solutions (Web Services)

Background:

• B.Eng. Production Engineering and Management, Technical University of Crete, Greece
• M.B.A. and MSc in Finance, Northeastern University, USA
• Ph.D. in Finance, Cass Business School, City University London, UK

3

Seminar Outline

• 2. Country Profile
• 7. Hellenic Energy Exchange
• 5. Electricity
• 4. Natural Gas & LNG Markets
• 6. Renewable Energy

Sources

• 3. Investments
• 1. A single EU Energy Market

4 Duration (09:30 – 11:30)

Part 1

• 2. Country Profile
• 3. Investments
• 1. A single EU Energy Market

5

• 1. The Creation of a Single

EU Energy Market

10 Trends shaping the current and future policies around the Energy sector

Climate change Renewables and Storage Clean technologies Green Economy Energy efficiency Digitalization Decentralization Emerging Markets Growth Security of supply Decarbonization 6

7

The creation of a single EU market is of top priority

• EU Member States are committed to

complete the Internal Market for Electricity (IME)

• The internal market requires

removing barriers to trade and aligning markets

• The 3rd Package creates a new

regulatory framework to assist IME and it is legally binding for markets to couple (EU Regulation 714/2009)

The Clean Energy Package is a set of measures that provides an energy policy framework to accelerate the clean energy transition in the EU

Clean Energy Package

Delivering on key energy infrastructure projects Accelerating research and innovation to support leadership in advanced RES Delivering on social concerns and job training to ensure social fairy energy transition Driving digitalization forward to enable new energy technologies Setting the right incentives for investment in the energy transition and maximizing the use of public funds External dimension: Forecasting security

• f supply and

promoting clean energy measures abroad Ensuring regional cooperation: Making the energy transition a multilevel government and stakeholder project

Source: European Commission

8

9

Third Energy Package: the tools towards the IEM

IEM Unbundling Third Party access Network codes Incentives for new infrastructure ACER / ENTSOs

10

Objectives of EU energy policy

Smart Infrastructure Diversified Supply Renewable Sources Energy Efficiency Competitive Markets

Competitiveness Security of Supply Sustainability

11

System operation:

Delivering coordinated schemes

Market:

Delivering well designed pan-European markets

Infrastructure:

Delivering a fit for purpose network

Three pillars for delivering the Internal Energy Market

Changed power flows Better service Efficiency Resource variability Uncertainty Security of supply Competitive prices Sustainability System stability

12

All participants in the market will face a new business environment Energy Markets will gradually become coupled and operate under pan-European rules

New Business Environment

1990 2015 2030

13

The largest Electricity Market in the world

• 42 TSOs in 35 Countries
• 312 693 km of Transmission Lines
• 3278 TWh Electricity Consumption(15% of Global)
• Over 500 million customers served
• Approx. 1000 GW net generation
• Pooling of resources saves the European customer €13 bill./year
• 13% of sales traded cross borders

14

Internal Energy Market for Electricity- Status of play

EU Internal Energy Market for electricity Guidance and standards for each timeframe: Forward Market / Derivatives Market Day Ahead (DAM) Intra-Day (IDM) Balancing Multi-Regional Coupling (MRC) / TSOs + PXs

• Coupling of regions and efficient management of

available transmission capacities between areas and countries

• Implicit capacity allocation - Cross Border Intraday

Trading

• Price Coupling of Regions (PCR)
• The initiative of Power Exchanges to develop a

single price coupling solution

• EUPHEMIA algorithm

IEM is expected to increase liquidity, efficiency, social welfare and transparency of prices and flows

• 2. Country Profile

15

The liberalization process of energy market has been relatively delayed, however significant developments are observed recently

1st Energy Package 1996 2nd Energy Package 2003 3rd Energy Package 2009 Regulation 1348/2014 2014 Regulation 1222/2015 2015

• L. 2773/1999
• Liberalization of

electricity market

• Establishment of RAE

1999 2005 2011

• Dec. 2000

Establishment of DESMIE

• L. 3426/2005
• Revision of L.2773
• L. 4001/2011

Organization &

• peration of the

liberalized electricity & natural gas market

• Feb. 2012

Establishment of ADMIE & LAGIE

2016

• L. 4425/2016

Wholesale financial electricity market

• Jun. 2018

Establishment of HEnEx & DAPPEP

• L. 4512/2018

Restructuring of electricity market

Timeline of the liberalization process in the Greek energy market 2014

Hydrocarbon exploration and drilling ratified by the Greek Parliament

2017

Wholesale natural gas liberalization

2018

Retail natural gas liberalization Target Model

• Feb. 2011

1st Energy Efficiency Package

• Mar. 2018

2nd Energy Efficiency Package

• Aug. 2011

Establishment of HEDNO

2012 16

17 Total greenhouse gas emissions to be reduce by at least 40% compared to 1990 (percentage achieved reduction> 42%)

• achieve equivalent objectives in terms of emissions reduction in the individual areas inside and outside of

the trading system of allowances

• quantitative achievement of national targets for the reduction of specific air pollutants
• withdrawal of lignite units power generation by 2028

Reduction of Greenhouse Gas Emissions and other Environmental Targets Increase of RES penetration The share of RES in final gross energy consumption to rise at least at 35%

• the share of RES in final gross electricity consumption energy to rise at least 60%
• the share of RES for the heating needs and cooling to overcome 40%
• the share of RES in transport sector to exceed 14% (achieves 19%) according to the relative methodology

calculation of the EU Achieve improvement in energy efficiency by 38% according to European methodology

• the final consumption of energy should not to exceed 16,5 Mtoe the year 2030
• the primary energy consumption should not exceed 2 2,5 Mtoe in the year 2030
• to be achieved at least 7 M toe cumulative energy saving in the period 2021 2030
• 3% annually energy renovation of the total buildings area of the central public administration by year 2030

Achieve improvement in energy efficiency

Source: Draft National Energy and Climate Plan, Ministry of Environment and Energy (2019)

The revised targets of the National Energy and Climate Plan 2019

Greece is far away from energy independency, since there is a significant gap between total production and total consumption

2 4 6 8 10 12

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Energy production in Greece (Mtoe), [1990-2016]

5 10 15 20 25 30 35

Total primary energy supply (Mtoe), [1990-2016] Total amount of energy tax revenue in Greece and EU 28 (millions €), [1996-2016]

100,000 € 120,000 € 140,000 € 160,000 € 180,000 € 200,000 € 220,000 € 240,000 € 260,000 € 280,000 € 300,000 € 1,500 € 2,000 € 2,500 € 3,000 € 3,500 € 4,000 € 4,500 € 5,000 € 5,500 € 6,000 €

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Greece EU 28

200,000 € 220,000 € 240,000 € 260,000 € 280,000 € 300,000 € 320,000 € 340,000 € 360,000 € 380,000 € 4,000 € 4,500 € 5,000 € 5,500 € 6,000 € 6,500 € 7,000 € 7,500 €

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Greece EU 28

Total environmental taxes in Greece and EU 28 (millions €), [2008-2017] 18

Source: IEA & Eurostat

The intertemporal interplay between energy supply and energy consumption by source in Greece

Total primary energy supply in Greece (ktoe), [1990-2016] Total final energy consumption by source (ktoe), [1990-2016]

5000 10000 15000 20000 25000 30000 35000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Primary and Secondary oil Geothermal, Solar, etc Natural gas Biofuels and waste Hydro Coal

5000 10000 15000 20000 25000

Electricity Geothermal, solar, etc Oil Products Heat Biofuels and waste Natural gas Coal

19

Source: IEA

Greece imports the majority of its oil and gas needs, which is translated as a huge cost and low rating in terms of security of supply

Electricity key figures per capita in Greece and Europe (KWh), [2017]

1000 2000 3000 4000 5000 6000 7000 Own consumption Production Import Export

Greece Europe

Natural gas key figures per capita in Greece and Europe (cubic meters), [2017]

100 200 300 400 500 600 700 800 900 1000

Own consumption Production Import Greece Europe

Crude oil key figures per capita in Greece and Europe (bbl.), [2017]

0.00 0.01 0.01 0.02 0.02 0.03 0.03 0.04 0.04 0.05 0.05

Production Import Greece Europe

2000 4000 6000 8000 10000 12000 14000 16000 18000

Fossil fuels Nuclear Hydro RES Total Greece Europe

Production capacities by source per capita in Greece and Europe (KWh), [2017] 20

Source: Eurostat

Greece has completed the national target of 20% reduction in greenhouse emissions in respect to 1990 levels, mainly because of the financial crisis

Greenhouse gas emissions intensity of energy consumption (2000 = 100), [2000 – 2016] Carbon footprint per capita in Greece and Europe (tons), [2017]

70 75 80 85 90 95 100 105 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU (28 countries) Greece

total Diesel and gasoline Natural gas Coal Other sources Greece Europe

21

Source: Eurostat

Compared to the rest EU countries, Greece has experienced the biggest increase as far as the inability to keep homes adequately warm

Inability to keep home adequately warm (%), [2010-2016]

15.4 18.6 26.1 29.5 32.9 29.2 29.1 9.5 9.8 10.8 10.8 10.3 9.4 8.7 5 10 15 20 25 30 35 2010 2011 2012 2013 2014 2015 2016 Greece EU 18.8 23.3 31.8 35.2 37.3 42.0 42.2 9.1 9 9.9 10.2 9.9 9.1 8.1 5 10 15 20 25 30 35 40 45 2010 2011 2012 2013 2014 2015 2016 Greece EU

Arrears on utility bills (%), [2010-2016] 22

Source: European Commission

• 3. Investments

23

Investments are crucial in order to enable the transition to a low carbon energy supply by the year 2050; A Global Overview

Global new investments in renewables by sector, (billion $), [2005-2017] Global new energy investments by sector (billion $), [2010-2017]

50 100 150 200 250 300 350 400 2005 2007 2009 2011 2013 2015 2017 Other (hydro, geothermal, etc) Biofuels Wind Solar 200 400 600 800 1000 1200 2010 2011 2012 2013 2014 2015 2016 2017 Electricity (network, fossil fuel and renewable generation) Oil & Gas (Upstream & Downstream) Nuclear

24

Source: IEA & Bloomberg

European energy investments is on a growing pattern, mainly boosted by better debt financing terms

Total new investments in renewables EU (billion $), [2005-2017] Energy investment by fuel in Europe, (billion $), [2017]

20 40 60 80 100 120 140 160 2005 2007 2009 2011 2013 2015 2017 47 61 36 10 20 30 40 50 60 70 Oil and Gas Coal Power generation Renewables transport and heat Electricity networks 29.79% 70.21% Upstream Downstream/ infrastucture 10% 0% 90% Coal, gas and oil Nuclear Renewables

25

Source: IEA & Bloomberg

52.90% 42.40% 39.50% 47.20% 1.60% 37.10% 56.70% 66.10% 42.30% 67.50% 47.10% 42.20% 18.50% 37.70% 40.00% 3.60% 48.80% 61.10% 33.70% 49.20% 39.60% 71.40% 6.20% Commerical Processing Food, Beverage and Tobaco Industry Metallurgy Petroleum Products Chemical and Pharmaceutical Industry Οther Μanufacturing Αctivities Paper, Wood and Furniture industry Electronic Products and Machines Textile Industry Construction Other Industries Financial Firms Shipping Accomodation Energy Real Estate Management Telecommunications, IT and Media Transport and Storage Rural Activities Health Catering industry Public administration 4,914 5,012 4,400 4,600 4,800 5,000 5,200 2014 2015 2016 2017 2018 4.0% 5.0% 4.0% 3.6% 2015 2016 2017 Η1 2018

The Greek banking system prefers to provide loans on the robust Greek energy sector , since its NPE percentage is considerably low

Outstanding loans in the energy sector (mil. €), [2014-2018] Non performing exposure of the energy sector (%), [2015-2018] Non performing exposure by sector in Greece (%), [H1.2018] 26

Source: Bank of Greece

New National Energy Plan New RES Market Model

The next day for Greek banking system is to provide a set of new investment opportunities that could assist win-win potentials in the market

Fin Tech – Banking Transformation

New Opportunities

Bad Debts Decrease Low Risk New Energy Projects

The new energy framework in line with the challenges of the banking sector

New Privatizations

27

19.0% 25.0% 32.1% 23.8% 31.0% 43.0% 56.0% 0% 10% 20% 30% 40% 50% 60% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

% share in final energy consumption % share in final electricity consumption

RES share in final electricity consumption %, [2010-2030]

Greece is expected to create energy investment opportunities due to the availability of RES potential and the ongoing sizeable infrastructure projects

28

Source: Draft National and Climate Plan 2030, Ministry of Environment and Energy (2018)

According to a realistic revision by HAEE, the projected investments regarding the period 2020-2030 will reach 20.1 billion euros

5.3

Energy Efficiency 26.3% RES Electricity Generation 23.8% Infrastructure in Electricity 21.3% Electricity Distribution Network - Digitalization 10.4%

0.2

New conventional power plants and upgrading existing 5.9% Natural Gas Pipelines 5.9% Network and Storage 4.9% Research and Development 1%

4.8 4.3

2.1

1.2 1

1.2

20.1

Total

HAEE’s projected figures (billion €), [2020-2030] 29

Source: HAEE

30 Fragmentation of projected figures (billion €), [2020-2030]

Source: HAEE

Total investments related to RES stand at 46.2% out of the total amount projected to be invested in the Greek energy market by 2030, based on HAEE’s realistic revision

RES Electricity Generation Infrastructure in Electricity Electricity Distribution Network - Digitalization

4.8 3

70% of 4.3

• bill. euros

1.5

70% of 2.1

• bill. euros

19. 5

Total related to RES:

9.3

Remaining budget:

10.8 5.3

Energy Efficiency 0,2 New conventional power plants & upgrading existing Natural Gas Pipelines Network & Storage R&D 1.2 1 1.2 1.3 0,6 Infrastructure in Electricity Electricity Distribution Network - Digitalization

31 Duration (11:30 – 11:45)

Coffee Break

32

Part 2

• 4. Natural Gas & LNG Markets

Duration (11:45 – 13:30)

• 4. Natural Gas

33

Natural Gas reserves are abundant worldwide and can support the energy transition to a low carbon economy

European import price formation (% of price formation mechanism) [2005-2017] Global natural gas production [2018] Global natural gas consumption [2018] Monthly average regional gas prices ($/mmBtu), [2010–2018]

US (Henry Hub) German Border Price NE Asia Spot Price UK (NBP) Japan (based on LNG) 2010 2011 2012 2013 2014 2015 2016 2017 2018

34

Source: IEA, IGU

Greek natural gas market is rising again after a steep drop during the economic crisis, being transformed to a fully liberalized market

3831 4502 2769 4643 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Power Production: Big Industrials: Distribution Grids: Total:

Natural gas consumption in Greece (mil. Nm3), [2007-2017]

19.62 34.23 5 10 15 20 25 30 35 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Weighted Average Import Price Balancing Gas Daily Price

Natural gas Prices in Greece (€/MWh), [2015-2018] 35

Source: DESFA & RAE

Natural gas entry points are expected to increase and get upgraded facilitating bi-directional flow

• f

natural gas with neighboring countries

500 1000 1500 2000 2500 3000 3500 4000 4500 5000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sidirokastro Kipoi LNG Total:

Entry points and quantities (mil. Nm3), [2007-2017] 36

Source: DESFA

Existing LNG terminal and future infrastructure will transform Greece to a natural gas hub, increasing the importance of the country in terms of security of supply

200 400 600 800 1000 1200 1400 1600 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Route of Trans Adriatic Pipeline (TAP) LNG market in Greece (mil. Nm3), [2007-2018] 37

Source: TAP & DESFA

20 40 60 80 100 120 140 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

No of Cargos

2000000 4000000 6000000 8000000 10000000 12000000 14000000 16000000 18000000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Quantity (cubic meters of LNG)

The current projection for LNG growth in the Greek market is significant greater compared to the previous decade

38

Retail market exists mainly in the regions of Thessaloniki, Thessaly and Attiki, yet there is an ambitious plan for expansion of the market through new grid construction and use

• f

CNG/LNG technologies for remote areas

Thessaloniki: 220k customers Thessally: 90k customers Attiki: 120k customers Region Attiki Thess Total Active Customer 120k 310k 430k Non-users with access 585k 232k 817k Penetration 36% 54% 43% Active customers in the three regions of EDAs, [2018] 39

Source: EDA Attiki, EDA Thessaly & EDA Thessaloniki

The area of Thessaloniki and Thessaly are under “EDA THESS” DSO, being the first areas to have been provided with natural gas

EDA Thess – Number of customers [2013-2017]

50 100 150 200 250 300 350 400 450 2013 2014 2015 2016 2017 EPA Thessalonikis EPA Thessalias EDA Thess

EDA Thess - Total distributed quantity (mcm) [2013-2017] EDA Thess - 4 Bar grid construction (km), [2013-2017]

3.2 6.7 10.3 14.1 18.2 291.8 336.5 50 100 150 200 250 300 350 400 2018 2019 2020 2021 2022 Existing Regions New Regions EDA Thess Total:

Active customers. [2018-2022]

310 2018

40

Source: EDA Thess

The area of Attiki is under “EDA Attiki” DSO, being the area with the lowest penetration rate and therefore with the greatest dynamic for market expansion

EDA Attikis 5-years plan: Grid construction (km), [2018-2022] EDA Attikis 5-years plan: New connections, [2018-2022]

325.8 338.3 343.0 348.3 354.3 110 115 120 125 130 135 140 150 200 250 300 350 400 450 2018 2019 2020 2021 2022 Distributed Quantities (mcm) [Left axis] Active Customers [Right axis]

EDA Attikis: Active customers and distributed quantities (mcm), [2018-2022] 41

Source: EDA Attikis

CNG & LNG technologies can offer reliable solutions to remote areas in which pipeline construction is costly, and at the same time are considered as ideal technologies for the expansion of the market to the islands

Remote cities & single Client

Industry Agriculture Power Chemical Distribution Transport Co Generation

Remote Cities

Compression Station Trailers Decompression LNG Terminal Truck Loading LNG Ship Small Terminal

Power Generation CNG/LNG potential market CNG supply chain LNG supply chain Industries 42

Source: HAEE

The retail market consists of more than 8 active suppliers some of which have started selling quantities in the B2B market before 2018

Fixed Amount per month DEPA Auctions Premium 1st Formula: Professional Fixed Amount per month Supply Price Premium 2nd Formula: Residential Central Heating Fixed Amount per month Fixed Amount per month on quantity 3rd Formula: Residential Autonomous Single Product Double Offer (Power) OR Services

Pricing formulas used by Greek natural gas suppliers 43

Source: HAEE

Future technologies around natural gas are coming to bridge the gap to a zero-carbon transition

Sync Gas & Hydrogen Technology Biogas Technology

H20

• Nat. Gas Grid

H2

Syn Gas

Penetration of biogas and sync gas into the natural gas grid 44

Source: HAEE

45

South East Gas Market and Prices: A Country-level Analysis

46

500 1000 1500 2000 2500 3000 3500 4000 4500

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Gas Volume (mcm)

Russia Azerbaijan

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Source: : Eurostat & ALSI

Imported Volumes of Gas by Pipeline in Greece, [2008-2018] Percentage of Total Imported Natural Gas in the form of LNG in Greece, [2008-2018]

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 2012 2013 2014 2015 2016 2017 2018 2019

Regasification capacity utilization rate of the LNG import facility in Revithousa, [2012-2019]

Greece

47

200 400 600 800 1000 1200 1400 1600 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Gas Volumes in mcm Algeria Egypt Norway Qatar Unted States Equatorial Guinea Nigeria Trinidad and Tobago Others

Source: : Eurostat

Imported Volume of Gas in LNG form in Greece

Greece

48

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Natiral Gas Quantities in ktoe

Final consumption - other sectors - energy use Final consumption - transport sector - energy use Final consumption - industry sector - energy use Final consumption - non-energy use Exports Distribution losses Energy sector - energy use Transformation input - heat only - energy use Transformation input - electricity

• nly/combined heat and power - energy use

Source: : Eurostat

Natural Gas Quantities used in Greece by sectorial end-use, [2008-2017]

Greece

49

0.0000 0.0100 0.0200 0.0300 0.0400 0.0500 0.0600 0.0700 2012.S2 2013.S1 2013.S2 2014.S1 2014.S2 2015.S1 2015.S2 2016.S1 2016.S2 2017.S1 2017.S2 2018.S1 2018.S2 Euro per kWh European Union (Excluding taxes and levies) Greece (Excluding taxes and levies) European Union (All taxes and levies included) Greece (All taxes and levies included)

0.00 0.02 0.04 0.06 0.08 0.10 0.12

Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) Greece (Excluding taxes and levies) Greece (All taxes and levies included)

Source: : Eurostat

Evolution of Gas Prices in EU-Greece for non-household consumers, [2012-2018] Evolution of Gas Prices in EU-Greece for household consumers, [2012-2018]

Greece

50

0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) Bulgaria (Excluding taxes and levies) Bulgaria (All taxes and levies included)

0.00 0.01 0.02 0.03 0.04 0.05 0.06

2011S1 2011S2 2012S1 2012S2 2013S1 2013S2 2014S1 2014S2 2015S1 2015S2 2016S1 2016S2 2017S1 2017S2 2018S1 2018S2 Euro per kWh EU (All taxes and levies included) EU (All taxes and levies included) Bulgaria (Excluding taxes and levies) Bulgaria (All taxes and levies included)

Evolution of Gas Prices in EU-Bulgaria for household consumers, [2007-2018] Evolution of Gas Prices in EU-Bulgaria for non-household consumers, [2011-2018]

Source: : Eurostat

Bulgaria

51

0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 2007.S2 2008.S1 2008.S2 2009.S1 2009.S2 2010.S1 2010.S2 2011.S1 2011.S2 2012.S1 2012.S2 2013.S1 2013.S2 2014.S1 2014.S2 2015.S1 2015.S2 2016.S1 2016.S2 2017.S1 2017.S2 2018.S1 2018.S2 Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) Romania (Excluding taxes and levies) Romania (All taxes and levies included) 0.00 0.01 0.01 0.02 0.02 0.03 0.03 0.04 0.04 0.05 0.05

2011.S1 2011.S2 2012.S1 2012.S2 2013.S1 2013.S2 2014.S1 2014.S2 2015.S1 2015.S2 2016.S1 2016.S2 2017.S1 2017.S2 2018.S1 2018.S2

Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) Romania (Excluding taxes and levies) Romania (All taxes and levies included)

Evolution of Gas Prices in EU-Romania for non-household consumer , [2011-2018] Evolution of Gas Prices in EU-Romania for household consumers, [2007-2018]

Source: : Eurostat

Romania

52

0.0000 0.0100 0.0200 0.0300 0.0400 0.0500 0.0600 0.0700 2011.S1 2011.S2 2012.S1 2012.S2 2013.S1 2013.S2 2014.S1 2014.S2 2015.S1 2015.S2 2016.S1 2016.S2 2017.S1 2017.S2 2018.S1 2018.S2 Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) Croatia (Excluding taxes and levies) Croatia (All taxes and levies included) 0.0000 0.0100 0.0200 0.0300 0.0400 0.0500 0.0600 0.0700 0.0800 2007.S1 2007.S2 2008.S1 2008.S2 2009.S1 2009.S2 2010.S1 2010.S2 2011.S1 2011.S2 2012.S1 2012.S2 2013.S1 2013.S2 2014.S1 2014.S2 2015.S1 2015.S2 2016.S1 2016.S2 2017.S1 2017.S2 2018.S1 2018.S2 Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) Croatia (Excluding taxes and levies) Croatia (All taxes and levies included)

Source: : Eurostat

Evolution of Gas Prices in EU-Croatia for non-household consumers, [2011-2018] Evolution of Gas Prices in EU-Croatia for household consumers, [2007-2018]

Croatia

53

0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 2011.S1 2011.S2 2012.S1 2012.S2 2013.S1 2013.S2 2014.S1 2014.S2 2015.S1 2015.S2 2016.S1 2016.S2 2017.S1 2017.S2 2018.S1 2018.S2 Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) Hungary (Excluding taxes and levies) Hungary (All taxes and levies included) 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 2007.S2 2008.S1 2008.S2 2009.S1 2009.S2 2010.S1 2010.S2 2011.S1 2011.S2 2012.S1 2012.S2 2013.S1 2013.S2 2014.S1 2014.S2 2015.S1 2015.S2 2016.S1 2016.S2 2017.S1 2017.S2 2018.S1 2018.S2 Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) Hungary (Excluding taxes and levies) Hungary (All taxes and levies included)

Source: : Eurostat

Evolution of Gas Prices in EU-Hungary for household consumers, [2007-2018] Evolution of Gas Prices in EU-Hungary for non-household consumers, [2011-2018]

Hungary

54

Source: : Eurostat

0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 2016.S1 2016.S2 2017.S1 2017.S2 2018.S1 2018.S2

Euro per kWh

European Union (Excluding taxes and levies) European Union (All taxes and levies included) Ukraine (Excluding taxes and levies) Ukraine (All taxes and levies included) 0.0000 0.0050 0.0100 0.0150 0.0200 0.0250 0.0300 0.0350 0.0400 2016.S2 2017.S1 2017.S2 2018.S1 2018.S2 Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) Ukraine (Excluding taxes and levies) Ukraine (All taxes and levies included)

Evolution of Gas Prices in EU-Ukraine for non-household consumers, [2016-2018] Evolution of Gas Prices in EU-Ukraine for household consumers, [2016-2018]

Ukraine

55

Source: : Eurostat

0.00 0.01 0.02 0.03 0.04 0.05 0.06 2013.S1 2013.S2 2014.S1 2014.S2 2015.S1 2015.S2 2016.S1 2016.S2 2017.S1 2017.S2 2018.S1 2018.S2 Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) Serbia (Excluding taxes and levies) Serbia (All taxes and levies included) 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 2013.S1 2013.S2 2014.S1 2014.S2 2015.S1 2015.S2 2016.S1 2016.S2 2017.S1 2017.S2 2018.S1 2018.S2 Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) Serbia (Excluding taxes and levies) Serbia (All taxes and levies included)

Evolution of Gas Prices in EU-Serbia for non-household consumers, [2013-2018] Evolution of Gas Prices in EU-Serbia for household consumers, [2013-2018]

Serbia

56

0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 2017.S1 2017.S2 2018.S1 2018.S2 Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) North Macedonia (Excluding taxes and levies) North Macedonia (All taxes and levies included) 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 2011.S1 2011.S2 2012.S1 2012.S2 2013.S1 2013.S2 2014.S1 2014.S2 2015.S1 2015.S2 2016.S1 2016.S2 2017.S1 2017.S2 2018.S1 2018.S2 Euro per kWh European Union (Excluding taxes and levies) European Union (All taxes and levies included) North Macedonia (Excluding taxes and levies) North Macedonia (All taxes and levies included)

Source: : Eurostat

Evolution of Gas Prices in EU-North Macedonia for non-household consumers, [2011-2018] Evolution of Gas Prices in EU-North Macedonia for household consumers, [2017-2018]

North Macedonia

57 Duration (13:30 – 14:30)

Lunch Break

58

Part 3

• 5. Electricity
• 6. Renewable Energy

Sources

Duration (14:30 – 16:00)

• 5. Electricity

59

Fossil fuels are still essential for the security of supply and the containment

• f

electricity prices for industrial and household consumers

Gross electricity generation (TWh), [2005-2018]

63.7 60.9 50.8 10 20 30 40 50 60 70 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Domestic 88.19% Imports 11.81%

Security of supply (%) [2018] 60

Source: Eurostat & HEnEx

Lignite generation is expected to decrease as lignite plants retire, with gas-fired generation and RES expected to further strengthen their position in the mix

Gross electricity generation by fuel (%), [1990 – 2016]

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Solid Fuels Petroleum and Products Gases Renewables 33.96% 33.90% 21.54% 10.60% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1

Natural gas Coal RES Hydro

2018

Gross electricity generation by fuel (% and MWh), [2018]

1,269 MWh 2,579 MWh 4,059 MWh 4,066 MWh

61

Source: Eurostat & HEnEx

The incumbent (PPC), still has a dominant share in electricity generation (52,51%, for 2018), while the remaining 47,49% consists of RES and alternative generators

Percentage of total quarterly generation per participant and fuel type (%), [2018]

6.36% 2.88% 4.22% 6.45% 10.42% 33.65% 14.00% 22.02% 4.62% 3.35% 4.91% 3.87% 15.02% 30.50% 13.09% 24.64% 4.33% 3.73% 4.44% 6.92% 13.55% 6.65% 4.16% 24.88% 9.57% 21.77% 6.52% 3.51% 4.97% 7.50% 17.93% 6.98% 3.72% 24.52% 4.11% 20.44%

Elpedion Heron Korinthos Power Mytilineos PPC Lig _Meg Lig_Mel PPC PPC DAPPEP Natural Gas Coal Hyrdo RES Qtr1 Qtr2 Qtr3 Qtr4

62

Source: HEnEx

Electricity consumption is anticipated to rapidly increase over the upcoming years, in line with the projected economic recovery

Total electricity consumption in Greece, EU 28 and World (TWh), [1990-2016]

32.85 64.31 59.28 2464.62 3183.43 3042.98 10901.84 23106.86

Greece

[1990-2016] TWh

EU 28

[1990-2016] TWh

World

[1990-2016] TWh

78% 22% 2016

Industry Households & Services

63

Source: IEA

RES and hydro stand at 49.5% of total electricity capacity for 2018, while alternative generators represent 21.5% of conventional units capacity

Total electricity capacity per fuel (MW), [2018]

5,469 3,904 4,900 3,171 RES Coal Natural gas Hydro

28,09 %

18,18 %

22,38 %

17,444 MW

31,35 %

8,596 810

767

511 433 422 289 147 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Heron Lig_Melitis Herron II Viotias Korinthos Power Lig_Megalopolis Mytilineos Elpedison PPC

Electricity capacity of conventional units per producer (MW), [2018]

11,975 MW

(68.6% of total)

2018

64

Source: HEnEx

The ability to pay the bills for electricity has developed to the greatest challenge for the Greek households

System marginal price and CO2 Prices [2015-2018]

5 10 15 20 25 10 20 30 40 50 60 70 80 January April July October January April July October January April July October January April July October 2015 2016 2017 2018 Monthly Average SMP €/MWh (Left Axis) CO2 European Emission Allowances in € (Right Axis) 0.05 0.1 0.15 0.2 0.25 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Medium size industries Medium size households

Electricity prices by type of user , (€/kWh), [206-2017]

51.62% 21.95% 26.43% Taxes and levies excluding VAT Network costs Energy and supply

Electricity prices components (%), [2016]

Source: Eurostat & HEnEx

65

Considering the period 2016 - 2018, there is no apparent trend to justify seasonal volatility in electricity prices of the Greek wholesale market

Seasonal daily system marginal price, (€/MWh), [2016 – 2017- 2018]

Winter Spring Summer Autumn

20 40 60 80 100 120 January February March April May June July August September October November December

2016 2017 2018

66

Source: HEnEx Average SMP 2016 : 42,8 €/ΜWh Average SMP 2017: 54,6 €/ΜWh Average SMP 2018: 60,3 €/ΜWh

Despite the fact that NOME auctions have been withdrawn, the share of PPC is constantly being reduced

Market share (%), [October 2019] PPC’s market share (%) [2016- Oct. 2019] Companies with market share > 2%, [2018 – Oct. 2019] 67

Source: HEnEx

69.75% 30.25%

PPC Rest 25 companies

94.39% 69.75%

65.00% 70.00% 75.00% 80.00% 85.00% 90.00% 95.00% 100.00% January March May July September November January March May July September November January March May July September November January March May July September 2016 2017 2018 2019 5.95% 5.87% 4.33% 2.26% 2.62% 2.17% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% January February March April May June July August September October November December January February March April May June July August September October 2018 2019

Heron Mytilineos Elpedison Watt and Volt NRG Voltera

• 700,000
• 600,000
• 500,000
• 400,000
• 300,000
• 200,000
• 100,000

Turkey Albania North Macedonia Bulgaria Italy

The adequacy of the system is expected to depend significantly on imports, in order for the system to meet adequately the load peaks

Imports and exports with neighboring countries (MWh), [2017-2018]

200,000 400,000 600,000 800,000 1,000,000 1,200,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 2018

Exports Imports

68

Source: ADMIE

69

• 400,000
• 300,000
• 200,000
• 100,000

100,000 200,000 300,000 400,000 500,000

Turkey Albania North Macedonia Bulgaria Italy Balance of Power between Greece and neighboring countries (Imports – Exports) (MWh), [2017-2018, Monthly]

Source: ADMIE

Imports Exports

During the period 2017 to 2018, Greece was mainly a net importer

• f electricity, mainly from Bulgaria and North Macedonia

Organization &

• peration of the

liberalized electricity market (L. 4001/2011)

2020

Greece’s electricity market legislative framework could be characterized as strongly governed by law and regulation

Electricity market legislative framework

1999 2005

Market liberalization (L. 2773/1999)

2011 2018 2016

RES Support mechanism (L. 4414/2016) Market Operator for wholesale market (L. 4425/2016) System & Market Code (L.3446/2005) Wholesale financial electricity market (L.4512/2018) Further liberalization of electricity market (L. 4533/2018)

2019

NOME Auctions Mandatory Pool / Day Ahead Scheduling Target Model 70

Source: HAEE End with Act of Legislative Content 1/10/2019

100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 BEV CNG FCEV LPG PHEV

Eco-mobility is still at infant stage in Greece, however, over the next decade it is anticipated to gain growing importance

Alternative fuel vehicle registrations in Europe [2008-2018]

200 400 600 800 1000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Battery price ($/KW), [2010-2030] 71

Source: Alternative Fuel Observatory, BNEF

` 2017 2018 Growth Electric cars (BEV) 50 87 74% Plug-in Hybrid (PHEV) 141 228 61,70% Hybrid (HEV) 2356 3635 54,30% Alternative fuel vehicle (NG) 359 1030 186,90% Gasoline 46068 61320 33,10% Diesel 39014 36885

• 5,50%

Total 87988 103185 17,30%

Car Sales in Greece [2017-2018]

72

Country

Purchase incentive or subsidies Tax benefits and exemptions Other Benefits (i.e. free parking) Infrastructure promotion measures Traffic Regulations (i.e. bus lanes, low emission zones)

Austria    Belgium   Bulgaria  Croatia  Cyprus  Czech Republic  Denmark   Finland   France     Germany      Greece  Hungary    Iceland     Ireland     Italy   Latvia    Lithuania    Luxembourg  Malta   Netherlands  Norway      Portugal    Slovakia   Spain     Sweden     Switzerland   United Kingdom

    

Fiscal and non-fiscal incentives towards Eco-mobility for all EU countries

The promotion of both fiscal and non-fiscal incentives in Greece will lead to a sharp increase in the share of electrical vehicles

Source: European Fuel Observatory, HAEE’s analysis

Regulators need to understand the changes underway and seek new solutions and market designs that can support the transition of electricity market

Forecast of total annual demand for electricity (GWh), [2006-2028]

60020 62720 52278 65120 45000 50000 55000 60000 65000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Historical Data Low demand Scenario Reference scenario High demand scenario

73

Source: ADMIE

• 6. Renewable Energy Sources

74

Greece shows a high potential for exploiting renewable energy technologies in all sectors of final consumption

Share of energy from renewable sources in the EU Member States (%), [2017]

17.50% 71.20% 32.60% 27.30% 21.50% 17.00% 13.30% 10.70% 6.40% 0% 10% 20% 30% 40% 50% 60% 70%

Greece target for 2020: 18%

75

Source: Eurostat

Greece target for 2030: 35%

✔

Over the past years, a significant effort has been observed towards increasing the share of RES in electricity generation

Historical data of RES electricity generation in Greece (TWh), [1990-2016]

2 4 6 8 10 12 14 16 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total Hydro

Wind

Solar Biomass - Wastes

76

Source: IEA

The process

• f

reforming and strengthening the RES support mechanism aims to increase investment confidence for RES projects in Greece

Installed Capacity of RES in Greece by type (MW), [Dec 2016 - Dec 2018]

351 82 2140 239 2555

1000 2000 3000 4000 5000 6000 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 2017 2018 Photovoltaics < 10kw Biogas-Biomass Photovoltaics Small Hydroelectric Stations Wind turbines

77

Source: DAPEEP

Five regions in Greece cover almost 74% of the total installed capacity for both wind and solar power

Installed capacity by region (%), [2018]

24.98% 21.15% 14.90% 14.00% 16.75% 26.32% Sterea Ellada Peloponnisos Anatoliki Makedonia and Thraki Dytiki Ellada Kedriki Makedonia Rest

Wind Solar

Euboea 10.41% Thessaly 14.00% Central Macedonia

East Macedonia & Thrace

Western

Greece

Peloponnese

Central Greece

78

Source: DAPEEP

Thanks to the progress of technology, wind energy is the cheapest

• ption for new power plants

Cumulative wind capacity by region (MW), [2018] 375 119 61 2 19 907 100 200 550 104 79 90 28 194 ΝΙΙs:322 TERNA Energy 536.1 ANEMOS (ELLAKTOR) 285.6 IBERDOLA Rokas 250.7 EDF HELLAS AE 238.2 EREN GROUP 210.9 ENEL GREEN POWER 200.5 MYTILINEOS GROUP 153.5 CF VENTUS 85.0 PPC Renewables 67.5 ENTEKA 67.0 EUNICE 60.6 RF ENERGY 60.4 Installed MW per wind energy producer , [2018] VESTAS 1483.6 ENERCON 621.8 SGRE 538.7 NORDEX 150.1 OTHERS 34.4 Installed MW per manufacturer [2018] 79

Source: HEDNO & ELETAEN

Massive growth of solar power will offer valuable support in various appliances in society, industry and business

216 329 98 108 275 317 27 275 310 104 79 9 1 ΝΙΙs:159 Cumulative solar PV capacity by region (MW), [2018]

Energy efficiency of photovoltaics (kWh/KWp), [2014- 2017]

The total land area

• ccupied

by Photovoltaics is about

40.000 acres

The area occupied by lignite stations and lignite mines is about 253.000 acres

80

Source: DAPEEP , HEDNO & HELAPCO

Despite the stochastic nature of RES, their contribution to electricity demand is 19.7% on average for 2017 and 2018

Total electricity consumption (GWh), total electricity generation from RES (GWH) and average system marginal price (€/MWh), [2017-2018]

10 20 30 40 50 60 70 80 1,000 2,000 3,000 4,000 5,000 6,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 2018 Total consumption Total generation from RES Average System Marginal Price (Right Axis)

81

Source: DAPEEP

The new RES support scheme is anticipated to reduce the cost burdened by the society

50 100 150 200 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec RES Photovoltaics < 10kw RES in NII Total

Value of ETMEΑR, Lignite fee and CO2 emission allowances (million €), [2017] Value of RES supporting scheme including Photovoltaics <10 kw and RES in Non Interconnected Islands (million €), [2017]

Total:1.849

1485 199 163

2017

888 32 151

Total: 1.073

2017

20 40 60 80 100 120 140 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ETMEAR Lignite fee CO2 emission allowances Total

Source: DAPEEP

82

ETMEAΡ: Ειδικό Τέλος Μείωσης Εκπομπών Αερίων Ρύπων

83

Near Future Market Situation

• The Greek Energy Market is expected to reach the target model at the end of June 2020
• Participation in the market. Energy Exchange will operate since June 2020
• Option for private PPAs (typical length 5-7 years). The auctions system will also remain as

an option

• Regulatory Authority of Energy (RAE)
• Currently more than 10.000 MW capacity have been submitted and are awaiting to be

issued

• Due to the extent of the awaiting applications, there is a strong possibility that RAE will

shortly suspend the submission of new applications for some period

• Competition in the Wind and Solar market

Current Situation

• The current status consists of Auctions System, held by RAE (Regulator), usually 2

times per year

• The

auctions are held separately for each technology (Wind, Solar) for Solar<20MW & Wind < 50MW

• Common Auctions are held for Solar>20MW & Wind>50MW
• A project is in a Ready to Auctions Status, after the issuance of the Final

Connection Offer by the TSO (ADMIE)

Market Information

Since 2016, a new support scheme for renewable projects has been adopted, based on Feed-in Premiums (FiP)

Snapshot of the FiP based support scheme

Sliding Feed-in Premium Market Income (Revenue) Reference Value (RV)

RV Excess Rebated amount €/MWh 84

Source: HAEE

Category ΙII (3 MWp < Wind < 50 MWp) 8 Projects – Auctioned Power 170,925 MW Starting Price : 90 €/MWh Minimum Price : 68,18 €/MWh Maximum Price : 71,93 €/MWh Weighted Average Price : 69,53437 €/MWh Category Ι (PV<1 MWp) 83 Projects – Auctioned Power 53,4835 MWp Starting Price: 85 €/MWh Minimum Price: 75,87 €/MWh Maximum Price: 80 €/MWh Weighted Average Price: 79,0196 €/MWh Category ΙI (1 MWp < PV < 20 MWp) 8 Projects – Auctioned Power 52,91896 MWp Starting Price : 80 €/MWh Minimum Price : 62,97 €/MWh Maximum Price : 71 €/MWh Weighted Average Price : 63,81281 €/MWh Category ΙII (3 MWp < Wind < 50 MWp) 14 Projects – Auctioned Power 170,925 MW Starting Price : 79.77 €/MWh Minimum Price : 55 €/MWh Maximum Price : 65,15 €/MWh Category Ι (PV<1 MWp) 192 Projects – Auctioned Power 60,35 MWp Starting Price: 81.71 €/MWh Minimum Price: 63 €/MWh Maximum Price: 68 €/MWh Category ΙI (1 MWp < PV < 20 MWp) 27 Projects – Auctioned Power 86,46 MWp Starting Price : 71.91 €/MWh Minimum Price : 63 €/MWh Maximum Price : 71.9 €/MWh

June 2018 December 2018

During the last two years, three auctions for renewable energy projects have been held by the Regulating Authority for Energy (RAE)

Source: RAE

RES Auctions 2018

April 2019 June 2019

RES Auctions 2019

Source: RAE Common Category – Big Projects (PV>20 MWp & Wind>50MWp) 8 Projects of 637.78MWp (7 Projects succeeded) Auctioned Capacity: 455.56 MWp Final Capacity: 437.78 MWp Starting Price: 64.72 €/MWh Minimum Price: 53 €/MWh Maximum Price: 64.72 €/MWh Weighted Average Price: 57.03 €/MWh Category ΙI (1MWp < PV < 20MWp) Planned Auctioned Capacity: 430 MWp Starting Price: 69.26 €/MWh Minimum Price: 61,95 €/MWh Maximum Price: 67,7 €/MWh Weighted Average Price: 62.78 €/MWh Category ΙII (3 MWp < Wind < 50 MWp) Planned Auctioned Capacity: 400 MWp Starting Price : 69.18 €/MWh Minimum Price : 59,09 €/MWh Maximum Price : 69,18 €/MWh Weighted Average Price: 67.32 €/MWh

12 of December 2019

Category ΙI (1MWp < PV < 20MWp)

43 Projects Planned Auctioned Capacity: 105,464 MW

Category ΙII (3 MWp < Wind < 50 MWp)

16 Projects Planned Auctioned Capacity: 225,450 MWp

Auctions Procedure or PPA

Bond Issuance for TSO Bid Bond Issuance for RAE

87

Regulatory Framework – Development Stages

Compared to current levels, solar power installed capacity is expected to grow by 51% in 2027, while wind power installed capacity to grow by 69%

Long-term forecast of RES installed capacity in Greece (MW), [2019 – 2030]

5,638 5,893 6,108 5,400 5,500 5,600 5,700 5,800 5,900 6,000 6,100 6,200 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Short-term forecast of RES installed capacity in Greece (MW), [2019]

2,555 6,077 3,000 6,749 5,966

13,793

2000 4000 6000 8000 10000 12000 14000 16000 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Wind turbines Photovoltaics Rest RES Total

88

Source: DAPEEP & ADMIE

89 Duration (16:00 – 16:30)

Coffee Break

90

Part 4

• 7. Hellenic Energy Exchange

Duration (16:30 – 18:00)

• 7. Hellenic Energy Exchange

91

92

Serbia (2015)

Electricity

Bulgaria (2014)

Electricity

Romania (2000)

Electricity / Natural Gas

Poland (1999)

Electricity / Natural Gas

Norway, Sweden, Denmark (2001)

Electricity

Germany (2002)

Electricity / Natural Gas

Spain & Portugal (1997)

Electricity / Natural Gas

Italy (2009)

Electricity / Natural Gas

Central Europe (2008)

Electricity / Natural Gas

Netherlands & UK (1999)

Electricity

Nord Pool EPEX Spot

ΕΕΧ

GME / ΙΡΕΧ OMIE

APX PXE

TGE South Pool

HUPX Slovenia (2008)

Electricity

Hungary (2010)

Electricity / Natural Gas

Czech Republic (2007)

Electricity / Natural Gas

PXs in Europe & in South East Europe

OPCOM

SEEPEX Croatia (2016)

Electricity

IBEX CROPEX

The Hellenic Energy Exchange is expected to launch operations by June 2020, as part of a plan to restructure the domestic electricity energy market, lower energy cost and strengthen security of supply

Timeline

February 2017 June 2018 MoU: LAGIE + ATHEX November 2018 June 2020 Establishment

• f EnEx Clear

Balancing Market under the Target Model Establishment

• f HEnEx

Official Operation

• f HEnEx

OTC contracts Aggregators

93

November 2019

94

Commercial Relationships in Competitive Markets PX Supplier 1 Trader 2 Wholesaler 3 Bilateral Contracts / OTC Supply Contracts PX purchases PX sales TSO Generator 3 Generator 2 Generator 1 Final Consumer 1 Final Consumer 2 Final Consumer 3 Final Consumer 4 Final Consumer 5

95

Power Exchanges Functions & Characteristics

TRADING

Anonymous Multilateral Easy Access Standard Products Reliability Security

Liquidity Price Reference

SETTLEMENT CLEARING MATCHING BROADCAST DELIVERY

96

DAM price formation: Supply/Demand balance

Price

Residential demand Industrial demand

Renewables Nuclear Peak units Imports Hydro reservoir

D S

Exports

MW

(CCGT) Combined cycle gas turbine

Market clearing Price

Commercial demand

Coal

Market clearing volume

97

Price Drivers

98

Impact of RES on market prices

Greater Volatility of Prices Higher Occurrences of Negative Prices coming from:

• Must-run nature of wind and

solar energy

• Lack of Flexible back-up

generation

38.49 14.08 51.35 48.71

• 36.82

15.12

• 9.3

16.9 19.99 50.7

• 60
• 40
• 20

20 40 60 80 1 3 5 7 9 11 13 15 17 19 21 23 1 3 5 7 9 11 13 15 17 19 21 23 4/2/2011 5/2/2011

Snapshot of the appearance of negative prices in Day-Ahead Prices of EEX per hour (€/MWh), [4/2/2011 – 5/2/2011]

Source: EEX

Hellenic Energy Exchange will organize and operate Greece’s new electricity, natural gas and environmental markets

The imminent framework of Greek energy market

Producers RES Producers Traders

Wholesale Market

Hellenic Energy Exchange

Financial Energy Products Day Ahead & Intraday Markets OTC Contracts

EnEx Clear ADMIE

Retail Market

Balancing

Power Exchange Transmission System Operator

Suppliers Clients HEDNO NII Self- suppling customers Suppliers RES Aggregators

99

100

Settlement and clearing is an important part of a market

Bilateral trading without netting

Trading with several counterparties

PX

Bilateral trading with netting Several counterparties and transactions One transaction for each counterparty Always only

• ne

counterparty!

101

Dimension Low Mid High Market Information X Transaction Cost X Matching Efficiency X Counterparty Risk X Regulation X Operational Risk X Transparency x Dimension Low Mid High Market Information X Transaction Cost X Matching Efficiency X Counterparty Risk X Regulation X Operational Risk X Transparency x

OTC Clearing House Liquidity Indicators Stability Indicators

OTC vs Clearing House Indicators

HEnEx is anticipated to encourage competition, guarantee transparency, enhance liquidity and facilitate integration with the rest European electricity markets

Hellenic Energy Exchange ownership structure

ADMIE 20% ΑΤΗΕΧ 21% DAPEEP 22% DESFA 7% EBRD 20% Cyprus Stock Exchange 10%

102

Source: HEnEx

Physical Delivery

The two pillars of the imminent wholesale power market are the power exchange and Over the Counter transactions (OTC)

Wholesale market structure

Wholesale Power Market

Power Exchange Over the Counter

Spot Market Derivatives Market Listing of OTC Contacts Day Ahead Intraday Physical Delivery Futures Forwards Options Financial Settlement

• r Physical

Delivery Spot Market Derivatives Market OTC Spot Contracts OTC Forward Contracts Financial Settlement

• r Physical

Delivery

103