OREANDA-NEWS. Greece aims to replace its mandatory pool market with an organised day-ahead market by 2018, although discussions continue on the type of bidding mechanism that should be implemented.

Greek grid operator Admie is obligated to start dry runs of a day-ahead market model in August 2017 and is expected to fully launch a market in December 2017, delegates heard at the Energy Commodities conference in Athens today. A balancing market should be implemented at the same time, while future developments include bilateral forward contracts and intra-day trading.

Financial swaps are the only mechanism currently permitted for forward trading in Greece. Exchange EEX at the end of 2014 introduced a Greek futures product, but only two Greek companies are registered to use this product, and liquidity dropped sharply from the middle of last year as a result of the financial crisis in Greece.

Discussions are continuing about which bidding mechanism to introduce to the day-ahead market — a unit-based or portfolio-based mechanism. State-controlled utility PPC favours a portfolio-based model, which is the more prevalent throughout Europe, while independent generators generally have no preference. But transparency and competition issues could arise with either mechanism. Submitting offers for generation in a unit-based mechanism provides for better market monitoring and improved transparency, but is inflexible for the producer. A portfolio-based mechanism would allow for more flexibility, which would assist PPC in managing constraints in running its lignite-fired units, which face limited running hours over 2016-23 under the industrial emissions directive. Portfolio bids would also allow PPC to better manage its take-or-pay gas contracts from Depa, as well as its hydropower reservoir levels.

Benefits from portfolio bidding would only be applicable to PPC, as independent power generators do not have a varied fuel mix in their portfolio. And there are concerns that a portfolio-based bidding mechanism could hinder competition, as plants that are nominated to operate to cover a block bid could exclude more flexible plants from operating in the balancing market.

Greece still aims to introduce Nome-style auctions, where PPC would sell a portion of its hydro and lignite generation to third parties in a move to boost competition. The auctions are expected to start "in the next couple of months", a source at regulator RAE told Argus on the sidelines of the conference.8