The government recently adopted a number of amendments to the Act on Renewable Energy Sources and High-Efficiency Cogeneration. According to the government, the amendments aim to harmonise national law with the EU legal framework, introduce an integration process for eligible producers of renewable electricity and high-efficiency cogeneration on the electricity market and reduce the obligation on suppliers to purchase renewables at a regulated price that is higher than the market price.
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%.
The government and all parties in Parliament recently entered into an agreement which entails a major commitment to developing green energy by 2030. The agreement contains a broad range of green initiatives and tax reliefs on electricity which aim to encourage Danish consumers to swap fossil fuels for green electricity. Similarly, the planned modernisation of the heating sector aims to provide both companies and consumers with greener and cheaper heating.
The Danish transmission systems for electricity and natural gas are owned, operated and developed by Energinet, an independent public enterprise owned by the state. The government recently made a new political agreement with a broad number of political parties concerning Energinet's future economic regulation, which means that it will become subject to a revenue framework. With the new agreement, Denmark will follow the same regulatory tendencies seen in other northern and western European countries.
A new executive order, which provides a framework for how grid companies can cover operational costs and return of investment, will be one of the most important tools for such companies going forward. The executive order stipulates the rules governing the prices that electrical grid companies can charge consumers to cover the costs of running the grid and has introduced a five-year regulation period.
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.
The new renewable energy sources state aid scheme was introduced in Greece in 2016 by way of Law 4414/2016. On 18 October 2018 the Regulatory Energy Agency launched the second regular competitive procedures for determining the reference prices of state aid for wind and solar energy producers in Greece, which offers a total tender capacity of 423 megawatts. The first regular competition procedures were conducted on 2 July 2018.
Pursuant to the commitments undertaken by the Greek state after the first memorandum of understanding between the Hellenic Republic, the member states of the European Union, the Monetary Fund and the European Central Bank was signed, the privatisation of energy companies in Greece has significantly progressed. The Hellenic Republic Asset Development Fund – the legal entity entrusted with implementing the privatisation programme of the Hellenic Republic – has undertaken a number of relevant projects.
Greece began reorganising its renewable energy system state aid scheme in 2016 by enacting Law 4414/2016. The minister of environment and energy has provided the legal framework for implementing the law and organising the competitive procedures to determine the reference prices for certain projects receiving operating aid. The first regular competitive procedures were initiated in April 2018, following the Regulatory Energy Agency's launch of three tenders. The tenders will be implemented in two phases.
Parliament recently passed a law regulating the procedure for the divestment of approximately 40% of Public Power Corporation's (PPC) lignite-fired production units and lignite exploitation rights. The aim of the law is to increase competition in the Greek electricity market. Currently, over 60% of the electricity produced in Greece is generated through the combustion of locally extracted lignite, while PPC accounts for 98% of all lignite production in the country.
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.
Following the recent issuance of the Ministry of Energy and Mineral Resources decree which imposed price caps on coal supplied for power generation in the public interest, the coal industry was expected to undertake significant lobbying in order to reduce or limit the decree's impact. This anticipated lobbying appears to have commenced already, as the decree was amended on March 12 2018 after having been on the statute books for just four days.
The government recently imposed caps on the prices payable for coal to be used for power generation in the public interest. The maximum price payable under the new Ministry of Energy and Mineral Resources decree is 30% less than the Indonesian benchmark price for equivalent coal sold for export in February 2018, which means that the country's coal producers will suffer a substantial cut to their profitability by selling coal for domestic power generation.
The Ministry of Energy and Mineral Resources recently announced the revocation of 32 regulations in furtherance of the government's efforts to reduce the regulatory burden on the energy and mineral resources sector. However, it was unclear which of these regulations had been revoked before the announcement and which would be revoked in the future. This situation has now been clarified with the issuance of four new revoking regulations, which form part of what some have called a 'big-bang' reform.
The Ministry of Energy and Mineral Resources recently announced the revocation of 32 regulations in the energy and mineral resources sector, three of which are of particular importance to independent power producers in the new and renewable power sub-sector. However, a subsequent examination revealed that most if not all of the regulations have yet to be revoked, and the lack of clarity in this regard has called the ministry's commitment to transparency into question.
The Indonesian Investment Coordinating Board recently issued the Regulation concerning Guidelines and Procedures for Investment Licensing and Facilities. As regards the oil and gas sub-sector, the regulation states that a permanent business entity may apply for a permit to establish a foreign representative office in the oil and gas sub-sector through the Electronic Investment Information and Licensing Services. Foreign representative office permits are valid for three years and are extendable.
The deep seabed mining (DSM) industry is growing rapidly, expanding beyond national jurisdiction and onto the high seas. The legal framework governing the DSM industry is unique and continues to evolve. While the opportunities in this territory – much of it literally uncharted – are hard to overstate, with a new and evolving legal regime comes special risks. While securing project finance for DSM projects is already challenging for technical and operational reasons, sovereign risk is another major factor.
With many of the foundations for its success already laid, solar photovoltaics is expected to dominate the global energy conversation in 2017. What remains to be seen is whether solar can compete (and whether it makes sense) and how the world's energy systems can be redesigned to accommodate the inevitably high and varying levels of deployment.
As they have sovereign rights and exclusive jurisdiction over the exploration for and exploitation of natural resources, coastal states are clearly acting within their public international law jurisdiction if they elect to refuse the operation of a floating production unit under a foreign flag. However, coastal states may need to look at alternative approaches and the subsequent consequences for coastal state governance.
Profitability in the liquefied natural gas market continues to be squeezed as prices remain low in a market awash with capacity. Costs have increased as human and resource availability has failed to keep pace with the rate of development. As a result of market conditions, a number of companies posted losses in the third quarter of 2016. However, opportunities remain.