Net losses signify the end of the lignite era in Greece
Lignite coal is one of Greece’s most important power generation feedstocks. In 2015, it accounted for 23.4% of national primary energy supply, and is the largest indigenous conventional energy source according to Euracoal.
Until recently, Greece’s Public Power Company (PPC) had what amounted to a national monopoly on lignite mining and lignite-fired energy production. While the Government of Greece has tried in the past to privatise part of PPC’s portfolio of lignite-fired power plants, it has so far failed to do so.
Privatisation is a key requirement of the European Commission to both liberalise the Greek energy sector, as well as move towards a lower carbon future.
Greek Prime Minister Kyriakos Mitsotakis recently committed to end all lignite-fired coal production in Greece by 2028, at the United Nations Special Climate Summit held in New York on September 2019.
A new report by The Green Tank, an independent non-profit organisation focused on sustainability, released a new report on the operations of PPC lignite units. The results showed net losses of € 683 million from PPC’s 14 lignite units between January 2016 and June 2019.
Moreover, the report predicts that:
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 losses of the order of €1,3 billion.
Recent PPC financial results showed total losses of € 233.5 million in the first quarter of 2019.
Greek electricity prices are relatively high due to carbon taxes given the significant role of lignite in the electricity generation mix. Greek lignite plants have the highest carbon intensity in Europe.
Given the high costs of carbon taxation; the need to invest in latest-generation production technology; costs of remediation and staff layoffs; and the potentially higher returns in photovoltaic or wind power, it is difficult to see how any solution absent privatisation and/or decommissioning will work in Greece.
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Photo (c) Kathimerini Greece
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The Greek Tank