The target model – the wholesale electricity market model – aims to gradually harmonize, through coupling, different national electricity markets, so that a unified EU electricity market can be established.

At European level, the legal framework for the Target Model derives from EU’s Third Energy Package. This package covers crucial energy related areas such as the implementation of unbundling rules, the establishment of the agency for the cooperation of Energy regulators (ACER) and the promotion of cross-border cooperation within the context of open and fair retail markets.

Specifically, Directive 2019/944 includes common rules for the functioning of the internal electricity market. EU Regulation 943/2019 incorporates the provisions of the previous Regulation 714/2009 and establishes specific rules related to the balancing responsibilities of the participants. Finally, Regulation 2016/1719 sets out detailed rules on cross-zonal capacity allocation in the energy markets.

At a national level, Law 4425/2016 was amended by Law 4512/2018, with the provisions of which, the following four markets were established: The wholesale market of forward electricity products (renamed energy financial market), the Day ahead market, the Intraday market and the Balancing Market. Another key provision of the Law is the establishment of the Hellenic Energy Exchange (“HEnEx”). Under the new law, ADMIE is the Independent Power Transmission Operator (IPTO) carrying the responsibility to manage the aforementioned markets and balance the system in real time.

Challenges to the implementation of Target Model in the Greek energy market

These challenges are closely related to the creation of a legal framework for competitive operations in the wholesale and retail market and the specification of the legal background for the new energy trading procedures. In addition, the transition to this new Model, includes the formation of a Power Exchange and Over the Counter (OTC) contracts.

As far as RES sector is concerned, new challenges arise considering that new renewable energy projects are obliged to participate in the Greek wholesale electricity market – either directly or through renewable energy aggregators – whilst undertaking some balancing responsibilities. This means that RES producers will be financially responsible for the additional balancing cost between their forecasts and their actual energy production. From that perspective, it is obvious that the contractual framework governing the relations between RES producers and RES aggregators representing them in the market, is crucial.

The importance of this contractual relationship is also intensified based on the fact that the implementation of the Target Model includes significant costs for RES producers such as deviation, clearance and non- compliance charges. Up to the present time, Greece’s market has entered a transitional stage, where RES producers obtain only a balancing responsibility for the deviations they cause in the balancing market.

The final stage of the participation of RES units in the target model is most likely to begin at the end of 2021. At this stage, RES producer’s participation in all relevant markets will be mandatory whereas a full balancing obligation will be required, leading to increased risk thus costs for the power fluctuation they induce. Moreover, their operating costs will rise, as a result of their compliance with the obligations set by Target Model.

RES aggregator’s aim at this point, is the commercially successful operation of the connected – RES units they represent, performed either in the form of energy-schedule optimization or in the form of power-system control services. By this way, they could possibly reduce the fluctuations between the forecast and actual production of RES units and consequently maintain the deviation charges imposed on RES producers, at a low level.

As the penetration of RES in Greece is increasing, the quest for flexibility arises. The concept of flexibility is considered as the ability to adapt to variable and possible unforseen changes in operating conditions. Up to now, it is mostly traditional units that provide stable energy generation, but as they are fading out, questions arise regarding RES unit’s capability to autonomously maintain this stability and bear its cost.

Edited by Dafni Sotirchou