The European Commission has opened a formal antitrust investigation to assess possible abusive behavior by Public Power Corporation (PPC) in the wholesale Greek electricity sector, examining whether Greece’s largest power producer and electricity supplier distorted competition and slowed down renewable energy investment, the EU’s anti-trust chief said on March 16.
“We all rely on well-functioning electricity markets,” EU Commission Executive Vice-President in charge of competition policy Margrethe Vestager said. “Today we are launching an investigation of PPC’s behaviour in wholesale electricity markets in Greece that might have distorted competition and slowed down investment into the generation of greener energy. Greece has recently embarked on an ambitious plan to exit from lignite. Ensuring effective competition is the best way to deliver competitively priced electricity, both for citizens and businesses, as well as to stimulate investment in less polluting energy sources.”
PPC, which is the largest supplier of retail and wholesale electricity in Greece, is majority owned by the Greek State. It controls all lignite and hydro as well as some of the natural gas and renewable power generation plants. It is also active in the supply of energy to retail and business consumers where it still has more than two-thirds market share.
The Commission expressed its concerns that PPC may have restricted competition in the Greek wholesale electricity markets with its bidding behaviour. In particular, in light of PPC’s position both at wholesale and retail levels, it may have adopted predatory bidding strategies hindering the ability of PPC rivals to compete in the wholesale and related electricity markets, the Commission said in a press release.
If proven, this behaviour may constitute an exclusionary predatory practice, which is in breach of EU antitrust rules, specifically on the abuse of a dominant market position, the Commission said.
The EN noted, however, that the opening of proceedings means that the Commission will examine the cases as a matter of priority but does not prejudge the outcome of the investigation.
EU to help Greece’s PPC with decarbonization
In related news, the European Bank for Reconstruction and Development (EBRD) said on March 12 the bank is supporting the ambitious sustainability and decarbonisation targets of PPC by investing €50 million in the company’s sustainability-linked bond issue.
With a total issuance volume of €650 million, the issue will help improve PPC’s access to finance by diversifying its financing sources to a new environmental, social and governance (ESG)-focused investor base.
The bond will include a sustainability performance target, with PPC committing to reduce CO2 emissions by 40 per cent by the end of 2022. The target translates into annual CO2 emission cuts of 9.2 million tonnes in 2022 compared to 2019 and is the most ambitious corporate decarbonisation target the EBRD has ever supported in the regions where it invests.
This target is expected to be met primarily by decommissioning all lignite plants by 2023 and replacing them with renewable energy capacity in a significantly accelerated programme that will add 1.3GW of mainly solar and wind power to PPC’s portfolio.
As the largest electricity generator and supplier in Greece, PPC is central to the country’s efforts to achieve its 55% greenhouse-gas emission reduction target by 2030. It is also the owner of Greece’s electricity distribution network and sole provider of electricity to those Greek islands not connected to the national grid.
The company has been listed on the Athens Stock Exchange since 2001 and its main shareholder is the Greek state (51.1%), through the participation of the Hellenic Republic Asset Development Fund and the Hellenic Corporation of Assets and Participations.
The bond will be aligned with the International Capital Market Association’s (ICMA) Sustainability-Linked Bond Principles (SLBP), published in June 2020, which promote transparency, disclosure and integrity in the development of green and sustainability-linked bond markets. It will also be the first sustainability-linked bond in the regions where the EBRD invests.
In 2020, the EBRD provided a €160 million senior unsecured loan to PPC to help address the impact of the Covid-19 pandemic. The facility supports PPC’s working-capital needs at a time of customer payment volatility and strengthens the resilience of the electricity sector.
“We are very proud to be supporting PPC’s return to the capital markets with a new sustainable financing instrument that underpins an ambitious decarbonisation and transformation strategy,” EBRD Regional Head, Energy South Eastern Europe George Gkiaouris said. “This is the first sustainability-linked bond issuance in the EBRD region with a broader demonstration effect. The transaction sends an important signal that access to finance for energy-intensive utilities increasingly depends on a commitment to decarbonisation and sustainability,” he added.
The EBRD started to invest in Greece on a temporary basis in 2015 to support the country’s economic recovery. To date, the Bank has invested over €4.2 billion in more than 70 projects in Greece’s corporate, financial, energy and infrastructure sectors.