The Effects of COVID-19 on the Energy Sector
The Effects of COVID-19 on the Energy Sector
Authors: Gus J. Papamichalopoulos, Konstantinos Varelas, Manos Nimas, KG Law Firm
In view of the COVID-19 outbreak situation, several packages of emergency measures have been adopted by the Greek Government.
The Energy industry overall is one of the sectors which, under the circumstances, is facing several issues and complications due to the suspension of operation of several governmental authorities.
DEADLINE EXTENSIONS ON RES AND CHP PROJECTS
Urgent measures have been introduced as outlined in the Legislative Act dated 30 March 2020 (GG B’ 75), responding to the concerns raised by the energy market players in the field of RES producers, voicing their concern on the impossibility of meeting the deadlines for the timely commissioning of the projects already initiated before the Covid-19 crisis. With a view to safeguarding the RES investments in Greece, said Legislative Act, inter alia, postpones the obligations of the RES investors for different periods depending on the status and the nature thereof with an aim to allow for more time to complete their development programs and to secure that said projects will be finally materialized.
The Legislative Act introduces extensions of several project timetables and their validity period in order to secure the necessary licences and administrative permits/acts. Most notably, the Act addresses the duration of the installation licences which are affected, the binding grid connection offers by the competent operator, as well as the deadlines for the electrification of the RES projects.
We summarise hereunder the introduced measures:
6-MONTH EXTENSION
- A six-month extension will apply for the installation licences and the binding grid connection offers for RES and CHP power stations which expire by 30 June 2020.
- A six-month extension has been added to the deadlines for the trial operation of RES power stations which have successfully participated in RES tenders, provided same will be commissioned (including the testing period) by 30 June 2020.
4-MONTH EXTENSION
- A four-month extension for the installation licences and the binding grid connection offers for RES and CHP power stations will apply in cases where their validity expires between 1 July 2020 and 31 December 2020.
- A four-month extension is added to the deadlines for the trial operation of RES power stations which have successfully participated in RES tenders, provided same will be commissioned (including the testing period) between 1 July 2020 and 31 December 2020.
- A four-month extension is added to the implementation date (01 January 2021) for the reference tariff upon which operating aid to RES project is calculated according to Ministerial Decision YPEN/DAPEEK/25511/882/20.03.2019 and para 5, Art. 4 of Law 4414/2016.
- A four-month extension is added to the operation, be it a trial or regular, deadlines of RES power stations which have concluded Power Purchase Agreements before 31 December 2015 and which, in accordance with para 12(a)(b) of Art. 3 of Law 4414/2016, are exempted from participating in RES tenders.
2-MONTH EXTENSION
A two-month extension is added to the deadline for the acceptance of the binding grid connection offer concerning RES and CHP power stations in accordance with Art. 3 and 4 of Law 3468/2006. The same two-month extension applies to the submission of the relevant guarantee letter to the competent Operator, as stipulated in sub-para I.1(3) of Law 4152/2013, provided they are due to expire between the period as of the date of issuance of the Legislative Act (i.e. 30 March 2020) and 30 June 2020.
FURTHER IMPLICATIONS AND OTHER MEASURES
EFFECTS ON THE ELECTRICITY MARKETS
Amidst this extraordinary situation, recent developments indicate that the implementation of the restructuring of the domestic electricity market in conformity with the Target Model will be delayed. The commencement of operation of the new electricity markets by the Energy Exchange, the go-live date of which according to the applicable framework was set for 30 June 2020 will inevitably be pushed back for at least two months since the provided date (10 April 2020) for the necessary simulation tests is already missed.
The effects of the pandemic are also visible in the Financial Energy Market, which, despite becoming operative just recently (23 March 2020), has since facilitated only one transaction on derivatives (officially announced by the Energy Exchange on 26 March 2020).
PRIVATISATIONS PROCESSES
Besides, 2020 was set to be the year marking important developments in the privatisation of infrastructure including significant energy state-controlled companies. These include the Trading and Infrastructure divisions of the Public Gas Supply Company (DEPA Trading SA and DEPA Infrastructure SA), the Public Power Corporation (PPC SA), the Hellenic Petroleum SA (HELPE), the South Kavala Natural Gas Storage the further privatisation of the Independent Power Transmission Operator (IPTO SA) and others. The unraveling emergency situation, however, has halted the relevant developments. Besides the extension of the conclusion of the first phase of the DEPA Trading SA process, delays are expected in the majority of the tenders. The Covid-19 measures provide the Hellenic Republic Asset Development Fund, as with other public authorities, the right to postpone, extend or even suspend the tender processes.
OTHER PROVISIONS
Special provisions allow energy companies to procure the necessary supplies in derogation of the applicable Covid-19 restrictive or lockdown measures in order to ensure the undisrupted supply of materials and spare parts. Furthermore, in order to ensure protection against the spread of the virus, energy companies are required to facilitate and perform transactions with their clients through various long-distance means of communication.
Overall, the Greek state’s early reactions indicate an effort to support the country’s major economic sectors in this unprecedented global crisis. The effectiveness of the timely implementation of the wide spectrum of measures, including an array of provisions such as the imposition of a curfew, restriction of movement within the country, closing of borders, limitation of air travel, etc., remains to be revealed in the upcoming period.
Authors: Gus J. Papamichalopoulos, Konstantinos Varelas, Manos Nimas, KG Law Firm
In view of the COVID-19 outbreak situation, several packages of emergency measures have been adopted by the Greek Government.
The Energy industry overall is one of the sectors which, under the circumstances, is facing several issues and complications due to the suspension of operation of several governmental authorities.
DEADLINE EXTENSIONS ON RES AND CHP PROJECTS
Urgent measures have been introduced as outlined in the Legislative Act dated 30 March 2020 (GG B’ 75), responding to the concerns raised by the energy market players in the field of RES producers, voicing their concern on the impossibility of meeting the deadlines for the timely commissioning of the projects already initiated before the Covid-19 crisis. With a view to safeguarding the RES investments in Greece, said Legislative Act, inter alia, postpones the obligations of the RES investors for different periods depending on the status and the nature thereof with an aim to allow for more time to complete their development programs and to secure that said projects will be finally materialized.
The Legislative Act introduces extensions of several project timetables and their validity period in order to secure the necessary licences and administrative permits/acts. Most notably, the Act addresses the duration of the installation licences which are affected, the binding grid connection offers by the competent operator, as well as the deadlines for the electrification of the RES projects.
We summarise hereunder the introduced measures:
6-MONTH EXTENSION
- A six-month extension will apply for the installation licences and the binding grid connection offers for RES and CHP power stations which expire by 30 June 2020.
- A six-month extension has been added to the deadlines for the trial operation of RES power stations which have successfully participated in RES tenders, provided same will be commissioned (including the testing period) by 30 June 2020.
4-MONTH EXTENSION
- A four-month extension for the installation licences and the binding grid connection offers for RES and CHP power stations will apply in cases where their validity expires between 1 July 2020 and 31 December 2020.
- A four-month extension is added to the deadlines for the trial operation of RES power stations which have successfully participated in RES tenders, provided same will be commissioned (including the testing period) between 1 July 2020 and 31 December 2020.
- A four-month extension is added to the implementation date (01 January 2021) for the reference tariff upon which operating aid to RES project is calculated according to Ministerial Decision YPEN/DAPEEK/25511/882/20.03.2019 and para 5, Art. 4 of Law 4414/2016.
- A four-month extension is added to the operation, be it a trial or regular, deadlines of RES power stations which have concluded Power Purchase Agreements before 31 December 2015 and which, in accordance with para 12(a)(b) of Art. 3 of Law 4414/2016, are exempted from participating in RES tenders.
2-MONTH EXTENSION
A two-month extension is added to the deadline for the acceptance of the binding grid connection offer concerning RES and CHP power stations in accordance with Art. 3 and 4 of Law 3468/2006. The same two-month extension applies to the submission of the relevant guarantee letter to the competent Operator, as stipulated in sub-para I.1(3) of Law 4152/2013, provided they are due to expire between the period as of the date of issuance of the Legislative Act (i.e. 30 March 2020) and 30 June 2020.
FURTHER IMPLICATIONS AND OTHER MEASURES
EFFECTS ON THE ELECTRICITY MARKETS
Amidst this extraordinary situation, recent developments indicate that the implementation of the restructuring of the domestic electricity market in conformity with the Target Model will be delayed. The commencement of operation of the new electricity markets by the Energy Exchange, the go-live date of which according to the applicable framework was set for 30 June 2020 will inevitably be pushed back for at least two months since the provided date (10 April 2020) for the necessary simulation tests is already missed.
The effects of the pandemic are also visible in the Financial Energy Market, which, despite becoming operative just recently (23 March 2020), has since facilitated only one transaction on derivatives (officially announced by the Energy Exchange on 26 March 2020).
PRIVATISATIONS PROCESSES
Besides, 2020 was set to be the year marking important developments in the privatisation of infrastructure including significant energy state-controlled companies. These include the Trading and Infrastructure divisions of the Public Gas Supply Company (DEPA Trading SA and DEPA Infrastructure SA), the Public Power Corporation (PPC SA), the Hellenic Petroleum SA (HELPE), the South Kavala Natural Gas Storage the further privatisation of the Independent Power Transmission Operator (IPTO SA) and others. The unraveling emergency situation, however, has halted the relevant developments. Besides the extension of the conclusion of the first phase of the DEPA Trading SA process, delays are expected in the majority of the tenders. The Covid-19 measures provide the Hellenic Republic Asset Development Fund, as with other public authorities, the right to postpone, extend or even suspend the tender processes.
OTHER PROVISIONS
Special provisions allow energy companies to procure the necessary supplies in derogation of the applicable Covid-19 restrictive or lockdown measures in order to ensure the undisrupted supply of materials and spare parts. Furthermore, in order to ensure protection against the spread of the virus, energy companies are required to facilitate and perform transactions with their clients through various long-distance means of communication.
Overall, the Greek state’s early reactions indicate an effort to support the country’s major economic sectors in this unprecedented global crisis. The effectiveness of the timely implementation of the wide spectrum of measures, including an array of provisions such as the imposition of a curfew, restriction of movement within the country, closing of borders, limitation of air travel, etc., remains to be revealed in the upcoming period.
