*Intervention by Nikos Mantzaris, policy analyst and co-founder of The Green Tank.
The agreement “package” for the debt settlement of the three municipal companies and for the solution – transitional and permanent – for the district heating of Kozani, Ptolemaida and Amyntaio has been unveiled. This proposal, which cannot be considered anything but simple, is being submitted as a matter of urgency and without accompanying documentation to the municipal councils of the three cities for a brief discussion and adoption, under the threat of the start of the district heating season.
But apart from the highly problematic, hermetically sealed negotiation process of the previous months, at the risk of all parties involved, this agreement:
1. Is harmful to the climate and against European heating policies. It locks Greece’s three lignite cities into fossil gas until 2041, at a time when other cities in Europe are moving away from it and turning to renewables to meet their heating needs.
2. Is expensive to implement. The construction of the gas CHP, as well as the interconnection of the Kozani and Amyntaio district heating systems will cost a total of EUR 176 million, based on the amounts indicated in the relevant invitations of interest.
3. Will be expensive for the residents of the three cities. The agreement does not include any safeguard that the district heating costs paid by the residents of the three cities will not skyrocket in the event that gas supply prices and CO2 emission allowances increase significantly compared to current levels (€30/MWh and €70/tn, respectively). It is underlined that the “conservative” Commission forecast provides a gas supply price of 38 €/MWh from 2025, while for emission allowances it predicts 140 €/tn in 2035 and 290 €/tn in 2040. It is worth noting that it is precisely on the basis of these Commission forecasts that the NECPs of all Member States, including Greece, were prepared. The Greek state is expected to support the inter-municipal company with 2.9 €/MWh (€1.75 million per year), an amount too small to mitigate the economic impact of such levels of gas prices and CO2 emission allowances.
4. Will be costly for all Greek citizens. A large part of the debt of all 3 companies, at least 43.3 million euros, will be paid by all Greek taxpayers who had nothing to do with its creation.
However, this one-off sum is small compared to what all electricity consumers in Greece will pay for the operation of this district heating system for 15 years. More specifically:
- They will be charged 2.9 €/MWh per produced thermal energy through the special RES & CHP account (ELAPE) for the operation of the entire district heating system of the three cities. Taking into account all the thermal energy produced, this amount corresponds to €1.75 million per year or a total of €26.5 million over 15 years.
- The law on the guaranteed price to be received by PPC for CHP will be changed, resulting in an additional charge of €11.3/MWh to ELAPE based on current gas supply prices and CO2 rights. Taking into account the estimated production of thermal energy from CHP, the additional annual amount to be charged to all electricity consumers in Greece is expected to be around €4 million per year or €59 million for 15 years. Obviously, if the Commission’s forecasts mentioned above are confirmed, the burden on ELARE will be much higher.
In summary, therefore, in order to implement this agreement between the regional governor, the mayors and the government, it is estimated that all Greek citizens will be burdened with at least EUR 129 million more. It should be noted that this amount does not include the guaranteed price that they would have paid for gas CHP anyway and regardless of the change in the law for calculating the guaranteed price which is mentioned in the agreement.
5. Does not specify whether the district heating of Ptolemaida will be covered by the Ptolemaida 5 lignite plant during the transitional phase. The reference to the possibility of using the lignite unit instead of electric boilers raises serious questions, especially in view of the announcement by DETIP showing with data that the cost of thermal energy from lignite is expected to be higher than the corresponding cost of electricity. It also does not specify what the permanent solution for Ptolemaida will be given that Ptolemaida 5 will be retired in 2026, while the thermal energy from the 65 MWth gas CHP is not sufficient to cover the needs of Ptolemaida as well (except Kozani).
6. Secures PPC’s place, since all or almost the entire amount owed to it by the district heating companies will be repaid to it (the wording on the settlement of 1/3 of the DETIP debt, which “will be a claim of the PPC against the Ministry of Environment and Energy”, remains unclear). More importantly, however, PPC does not seem to be taking any risk on this investment since it is guaranteed payment based on a mathematical formula regardless of how gas supply prices and CO2 rights prices develop.
From the company’s point of view, such an attitude is understandable given the impressive shift in its business model towards sustainability in recent years.
But it is not at all understandable why the mayors, the regional governor and the government insist on this solution – especially without any alternative having been considered.
Clean alternatives to gas do exist and are already being implemented in Europe by cities that understand that only renewables shield district heating from unforeseen geopolitical developments that drive up fossil fuel prices, as well as from the projected rise in emission rights prices.
Conditions have changed dramatically since 2020 when this fossil gas-based district heating system was designed. Τo be politically realistic, an immediate redesign of the solution with a focus on renewables should be carried out. The citizens of Western Macedonia, and of the whole country, deserve a truly sustainable solution.
The article was published on Wednesday 16 October in local media in Western Macedonia, as well as in Energypress.gr.
