Net losses in the range of €700 million from the operation of the Public Power Corporation’s lignite units in the past 3,5 years are revealed in a new report by the Green Tank. The findings suggest the retirement of specific lignite units in the immediate future so that PPC’s losses are minimized in the coming years.
The Green Tank’s report “The economics of Greek lignite plants: the end of an era.” sheds light to the economics of the 14 Greek lignite units owned by the Public Power Corporation(the PPC) for the past 3,5 years. The report examines 4 future scenarios and provides prodictions on how the economic situation will evolve in the next 3,5 years. The report notes that:
- From January 2016 until June 2019, PPC has accumulated net losses of €683 million just from the operation of its lignite units.
- If the current lignite fleet remains as is, then in the next 3,5 years, the situation will deteriorate and the lignite industry will accumulate net losses of the order of €1,3 billion.
- No scenario out of the 4 constructed and analyzed can lead to a net profit of the Greek lignite industry in the next 3,5 years even for carbon prices significantly lower than the analysts’ predictions.
The report concludes, in addition to protecting the climate, nature and public health, the retirement of lignite units is also dictated by purely financial reasoning in the context of salvaging PPC, the largest publicly owned company in Greece, which currently finds itself in the worst financial state of its history. Specifically the report proposes:
- The immediate retirement of the Kardia and Amyntaio plants since it will vastly improve the economics of PPC by slashing the lignite-fleet’s projected net losses by over €600 million in the next 3,5 years.
- Provided that 3 TWh of electricity per year can be produced by other sources, the additional retirement of the Ag. Dimitrios I-II and Megalopoli IV units is also recommended, since it will bring down the annual net losses of Greece’s lignite industry to less than €130 million, a 66% improvement compared to the scenario where no retirement takes place.
The report’s findings highlight the dire need for updating Greece’s current draft for the National Energy and Climate Plan (NECP). Specifically, the draft NECP proposes a 9,5 TWh lignite-based electricity production in 2030 by a 2,7 GW lignite fleet, while the report shows that the economic rescue of PPC is tightly linked to having the same levels of electricity production 10 years earlier, while maintaining a much smaller lignite fleet with less than 1,5 GW of net lignite capacity.
“Data do not lie. Given the explosion of CO2 prices and the fact that Greek lignite plants have, by far, the highest carbon intensity in Europe, it is imperative that Greece commits to a specific retirement schedule of all lignite units until 2030, at the latest. The recommendations for lignite unit retirements made in this report may contribute towards identifying the units that need to retire first” noted Nikos Mantzaris, policy analyst on energy and climate issues at the environmental think tank, The Green Tank.
Notes to editors
- The analysis utilized publicly available data and was based on a simple mathematical model, which calculated monthly gross and net profits for each one of the 14 lignite units of Greece.
- Future projections for the evolution of lignite plant economics in the next 3,5 years were based on the same model and realistic assumptions for the future values of critical parameters. Four (4) scenarios were constructed an d analyzed: the first was based on keeping the lignite capacity as is (Business as usual (BaU) and the remaining three consist of retirements of specific lignite units.
- Please read here the whole report titled “The economics of Greek lignite plants: The end of an era.”
- Please read here the executive summary of the report.