The Implementation of the Target Model | The Next Day for the Electricity Market in Greece

During an insightful Virtual Event organized by the Hellenic Association for Energy Economics, on Thursday, 3 December 2020, moderated by Prof. Kyriaki Kosmidou, Vice-President of HAEE, Prof. George Ioannou, CEO of EnEx Group talked about the recent developments of the Greek electricity market after the implementation of the Target Model on the 1^st of November 2020.

Regarding the maturity level of the European and Greek electricity markets, Prof. Ioannou noted that at European level, the implementation of the Day-Ahead and Intraday markets has been completed according to the EC Regulation 1222/2015. Despite the delays, the Greek market is moving forward implementing the Target Model and designing the coupling with the electricity markets of Italy and Bulgaria.

He also highlighted the importance of markets’ adjustment to the forthcoming RES increasing penetration, aiming το support the goal of decarbonization.

Prof. Ioannou characterized the transition from the Day-Ahead Scheduling to the Target Model as quite successful, in spite of technical challenges and the limited time frame until the 1^st of November 2020, when it started its operation. This fact is reflected to the participation of all actors (producers, suppliers, RES aggregators, etc.) who are trying to adjust to this new framework of the Greek electricity market.

Concerning the main expectations from the Target Model implementation, Prof. Ioannou underlined the optimal use of interconnections, the enhancement of competition and the security of supply, resulting from the coupling with the Italian and Bulgarian markets. He also noted the social benefits from the Target Model implementation, as well as new opportunities for investments and growth of the Greek economy.

When asked about the challenges for the participants, he mentioned that conventional producers should handle with the best way they can in the long-term, not only their facilities, but also their bidding strategies, since a short-sighted approach, despite any temporary benefits, will not be sustainable.

As far as RES are concerned, Prof. Ioannou stressed that they have many opportunities to participate in the market and highlighted the need of using derivatives for hedge, as well as the use of Intraday instead of the Balancing market.

Moving forward, Prof. Ioannou mentioned the characteristics of the markets operated by the HEnEx, i.e. the Day Ahead and the Intraday markets, along with the Balancing market operated by ADMIE. He mentioned the possibility of physical delivery created by the Derivatives market and the hedge that they offer, without forgetting the important involvement of systemic banks that act as General Clearing Members.

Regarding the wholesale and retail price range of electricity in Greece, he stated that he is not in the position to evaluate the prices, since he represents the institutional body that is responsible for the bidding procedure. At the same time, he commented that the prices fluctuate according to the law of supply and demand. Prof. Ioannou emphasized on the positive results expected from the Target Model implementation in terms of fair access to all markets and the role of HEnEx ensuring it. He also noted the solid Regulatory framework under which the HEnEx operates, its supervisory activities for the markets and the efforts made for communicating transparent information, in order to cope with incidents of market abuse and manipulation (although the latter is under the responsibility of the Regulatory Authority of Energy).

As far as the market coupling with the neighboring countries is concerned, Prof. Ioannou mentioned that until the 15^th of December, the Day Ahead market coupling with Italy will be completed, consisting an additional step in the development of Target Model for the domestic market. In parallel, the respective coupling with Bulgaria is expected to be completed in 2021, creating better conditions for competition. In conclusion, the CEO of EnEx stressed the ongoing effort to develop a natural gas wholesale market under the framework of Target Model, that is anticipated to be functional by the end of 2021. This step will facilitate and support the strategic goal of the country to become an Energy Hub in the wider area of SE Mediterranean.