Power producers: Maintaining gas reserves in Italy is useless and unprofitable

There will be no benefit to the security of the Greece’s energy supply by maintaining additional natural gas reserves in an underground storage facility in Italy.

Most power producers make this point in response to the Regulatory Authority for Energy – RAE’s invitation to comment on the “Precautionary Action Plan for the Security of Natural Gas Supply in Greece”, which, among other things, proposes as a measure the establishment of 1.14 Terawatt hours of underground storage in Italian infrastructure. RAE had made the specific proposal in the context of the Commission Regulation which provides that member states should keep safety stocks in such storage facilities. However, in the event that such storage is not available, it established a series of exceptions such as e.g. the storage of quantities of LNG .

In the consultation, therefore, the majority of electricity producers are against such an obligation.

In fact, the Hellenic Association of Independent Power Producers (HAIPP) formulates the position that the specific action proposed by RAE “is unprofitable for the final consumer but also restrictive (eg why is Italy chosen and not some other storage unit within the European Union?”.

According to HAIPP “RAE’s proposal does not offer the expected benefits to natural gas consumers, market participants and the national economy in general. The reason is that the limited capacity to import natural gas from Italy greatly reduces the benefits of storing natural gas on behalf of Greece in an underground facility in Italy, while on the contrary the management costs of such an action would be particularly high.”

The HERON firm also came out in the same vein: “The expected benefit from the action in question is negligible for guaranteeing the security of supply of Greece, while the cost for the participants that will then have to be recovered through the Security of Supply Fee is disproportionately high’.

The Administrator

Motor Oil, for its part, considers that this obligation should be undertaken by National Natural Gas System Operator (DESFA): “The maintenance of natural gas stock in Italy’s storage infrastructure should be done by the DESFA Administrator and made available by it on the Energy Exchange platform. In this way, the balancing prices will reflect the costs of transportation and storage in an objective way and also all natural gas network users will have the same access and will be able to carry out natural gas transactions exploiting their portfolio”.

Mytilineos also addresses HAIPP’s question regarding the reasons for choosing Italy for gas storage, and additionally notes: “The expected benefit from the proposed Action is absolutely negligible (only 7.5 Gigawatt hours per day), and therefore it is completely judged as a disproportionate burden on the domestic energy market”.

The industries

In the same consultation, the companies Mytilineos, ELLAGROLIP and the Association of Fertilizer Businesses and Industries ask RAE to exempt their factories from the possibility of an emergency interruption of electricity and natural gas supply, should the need arise.

Mytilineos referring to “Aluminium of Greece” describes in its letter the technical problems, the material damage and the difficulty of restarting its factory in such an event. It also claims that the lost profits will amount to 650 million euros on an annual basis, while it also talks about the effects on the Greek economy.

ELLAGROLIP and SEVL requested an exemption from the interruption of natural gas supply as they argue that this particular fuel is used as a raw material for the production of fertilizers, necessary for the domestic agricultural economy.