The Krk liquefied natural gas terminal project changed course when the government decided to construct a floating terminal instead of the initially planned land-based terminal. The reason for this decision was to make the terminal operationally faster and reduce costs, since it was clear that the deadlines for making the land-based terminal operation were unattainable. Since the deadlines for building the terminal are short, LNG Croatia is simultaneously undertaking several activities in order to meet them.
As part of its goals, the Act on Amendments to the Gas Market Act sets out a new gas market model. Under the new gas model, on receiving a proposal from the ministry and following approval from the Gas Regulatory Agency, the government will set the maximum price for gas, according to which the wholesale supplier must sell gas to retail suppliers for households. It remains to be seen how this new gas market model will affect consumers, the economy and the overall gas market.
The relationship between INA (the national oil and gas company) and MOL (Hungarian Oil and Gas Plc) goes back to 2003, when INA was privatised through a public procurement process. However, the Croatian government and MOL are in two international disputes over INA. Following a recent decision, the prime minister announced that the government will initiate the process to buy-out MOL's shares in INA.
Recent initiatives in the Croatian energy sector include the construction of the largest solar-powered irrigation system in Europe, which is already proving to be an ideal solution to water management in agriculture. Further, the government recently announced its plan to increase the renewable energy sources incentive fee. As a countermeasure, the government lowered the value added tax rate for electricity supply from 25% to 13%.
Participating countries at the recent Dubrovnik forum signed the Statement on the Three Seas Initiative, with the aim of connecting the north-south gas corridor, reviving cooperation between Adriatic, Baltic and Black Sea countries and unifying the European energy market. One of the initiative's key projects is the liquefied natural gas terminal on Krk Island in Croatia, which will be the backbone of the new gas corridor to the Baltics.
The discovery of natural gas in Cyprus's exclusive economic zone is expected to reduce fuel import costs significantly and redefine energy consumption-related policies. In developing future export plans for local natural gas reserves, the government examined various options, including the construction of an onshore liquefied natural gas terminal and the export of gas to Egypt through a marine pipeline.
The application deadline for the third licensing round for the exploration of Offshore Blocks 6, 8 and 10 in the exclusive economic zone recently expired. A total of six applications were received from eight companies, which will now be evaluated by the competent advisory committee. The successful candidates will be granted a hydrocarbon exploration licence to carry out geophysical surveys and exploration drilling for an initial period of three years.
Due to a recent agreement between the government and the Danish People's Party, solar and wind power projects will compete for state subsidies for the first time. Under the new subsidy model, the solar power, land windmill or near-shore windmill projects which deliver the highest amount of megawatts for the lowest price will receive subsidies until the budget is allocated. Subsidies will be awarded as a fixed additional charge to the electricity cost.
The government-established Energy Commission recently filed its recommendations for the future energy policy. The commission's report forms part of the policy preparation for the next stage of Denmark's green transition. The central message of the recommendations is that to reach the goal of a low-emissions society by 2050, an ambitious and long-term energy policy must be established by 2020.
In several energy supply industry sectors, profits are allowed only as a reasonable return on invested capital subject to regulatory control. This applies, for example, to the electricity distribution, gas distribution and heating supply sectors. The Danish Energy Regulatory Authority is in the process of establishing new methods and principles for determining a reasonable return on invested capital across the different sectors.
The government recently came to an agreement with a majority of Parliament concerning the financial regulation of electricity distribution companies. The agreement is the first step towards the government's new energy supply strategy. However, its details remain vague, including with regards to general and individual optimisation requirements.
McKinsey & Company recently delivered a report analysing the optimisation potential in the energy supply sector as part of the government's anticipated energy supply strategy. The report covers district heating, waste incineration, electricity distribution, gas distribution and water supply, and concludes that there is potential for optimisation of between Dkr5.9 billion and Dkr7 billion annually across these sectors.
A recently published EU regulation establishes a network code which defines the requirements for the grid connections of power-generating facilities with the aim of facilitating effective competition in internal electricity markets, system security and the integration of renewable electricity sources and an EU-wide trade in electricity. The network code's requirements will apply to new power-generating facilities.
The Greek energy sector is expected to expand over the next few years as a result of, among other things, the optimisation of the energy mix – which consists of a reduction in fossil fuel-generated electricity and an increase in energy from renewable energy sources (RES) – and the liberalisation of the electricity and natural gas markets. Greece is also expected to create energy investment opportunities due to the availability of RES potential in the country and ongoing substantial infrastructure projects.
During 2017, a group of experts worked on the modelling and organisation of the Energy Exchange with the intention that it would be established and begin operating in the first half of 2018. As such, the Ministry of Energy and Environment recently presented, through a public consultation, the draft Energy Exchange Law, which would amend the Target Model Law and the Energy Law.
In 2016 Law 4389/2016 introduced the sale by auction of electricity forward products with physical delivery by the Greek vertically integrated Public Power Corporation (PPC) to eligible electricity suppliers. The purpose of these auctions is to reduce the PPC's retail market share in the interconnected system, enhance competition and provide better quality products and lower prices to consumers.
Two international tenders granting exploration and exploitation rights for the block areas of Southwest and West Crete, as well as the Ionian Sea, were recently published in the Official Gazette. This publication follows the expressions of interest by the consortium Total-ExxonMobil-Hellenic Petroleum for Southwest and West Crete and Energean Oil and Gas for the Ionian Sea. The expected announcement by the Official Journal of the European Union will also allow other interested stakeholders to submit offers.
Decision 51 of the Government Council for Economic Policy was recently published, approving the process for a new international tender for the acquisition of a 66% stake in the national natural gas transmission system operator. The new tender was launched by the Hellenic Republic Asset Development Fund on June 26 2017 and will remain open to receive respective expressions of interest until August 7 2017.