Mytilineos and Karatzis have signed a Power Purchase agreement (PPA) for the acquisition of power from three large PV plants in Greece.
Under the PPAs, Karatzis will sell power from three projects with a total capacity of 270.8 MW to customers, marking a positive development for the Greek PPAs market as a whole, which has been hitting certain obstacles and developing more slowly than initially expected.
The total investment of the three projects is €190.8 million, of which €159.6 million will be provided through the EU Recovery and Rehabilitation Fund (RRF) and bank loans.
Karatzis had earlier received loan approvals from Eurobank and Piraeus Bank and signed a contract for the supply of equipment. Construction work has begun near Kileler in Thessaly and the facilities are expected to be operational by the third quarter of 2024.
This new agreement shows that despite the increase in electricity prices over the past few years, it still makes sense for certain large producers and consumers to enter the PPAs market.
However, as multiple obstacles remain in Greece, it remains to be seen whether more players will accept the power purchase agreement. There is also the issue of scale, as PPAs are complex and expensive tools, so for now they only make sense for large companies.
Karatzis is aiming for 600 MW of renewable energy
Mytilineos and Karatzis are well-known industrial groups in Greece. Mytilineos produces metals and also has a vertical presence in the energy market and is one of the top private producers and suppliers. Karatzis produces a wide range of web products and has five factories. In recent years, it has expanded into green energy through the construction of photovoltaic power generation.
Karatzis has set high targets for its renewable energy sector to install 330 MW of photovoltaic power generation systems with battery storage in Thessaly, central Greece, in the next few years.
These investments will help Karatzis achieve its target of 600 MW of installed renewable energy capacity. The group's financial results for 2022 show energy sales of 6.6 million euros, representing 18.2 percent of its total sales, and the company expects this proportion to grow over time.
The PPA market faces obstacles
To date, Greece has signed 30 power purchase agreements, of which the physical PPA and financial PPA are almost equally divided. Some so-called "pocket power purchase agreements" involved intermediaries, such as the deal between the Public Power Company (PPC) and Viohalco, in which Heron acted as an intermediary.
Despite the initial interest shown by a large number of consumers, the market appears to need more time to move at the required pace.
Renewable energy projects that have signed power purchase agreements can be prioritized for grid connection. However, reasons for consumer hesitation include the cuts causing uncertainty about available production and affecting virtual power purchase agreements. The expectation of lower electricity prices could also lead consumers to turn to the wholesale market instead of locking in prices for years through power purchase agreements.
Mytilineos: The Green Pool initiative was rejected after a year
Greek industry is pinning its hopes on the so-called "green pool," a framework to provide public support for new power purchase agreements. It aims to help large industrial power consumers such as aluminium, steel, glass and cement plants sign up jointly under the supervision of public bodies acting as a single buyer and seller of participating companies.
However, the European Commission rejected the government's proposal last month and is now working to resubmit it in a new and better form.
Evangelos Mytilineos, Chairman and CEO of Mytilineos Group, expressed regret over the committee's decision at the time. "Unfortunately, we have heard the bad news that the Green Pool plan has been rejected after a year of consultation. Every country is trying to achieve economies of scale but it is difficult, "he said.
It is worth noting that the power purchase Agreement market across Europe has been facing challenges over the past few years. As prices rose during the energy crisis, many companies turned to other mechanisms to achieve price stability. As part of the new electricity market architecture due to be completed by the end of this year, the EU is focusing on power purchase agreements and contracts for Difference (CFDS) as well as improving the futures market to provide a full suite of solutions.
