Opinion: Deregulation of the Wholesale Electricity Market
(Article published in the newspaper “Kathimerini” on June 25, 2011, by Dr. Markela Stamati, LL.M., Senior Associate)
The delay in the process of liberalisation of the Greek electricity market for over a decade
has an adverse effect on the development of trade between domestic or foreign producers
and suppliers causing significant economic disadvantages, leaving Greece behind rapid
exchanges in European and non European markets.
A discussion has thus started on the organization of the short term wholesale electricity
market and ancillary services market (Daily Ahead Scheduling (DAS) – Energy and
Ancillary Services Market) which along with the long term capacity market (Capacity
Market) constitute the basis of the Greek electricity market. DAS, operated and
controlled by the independent Hellenic Transmission System Operator (HTSO), is
actually the wholesale electricity market that aims at the better planning and dispatching
of power plants (conventional and renewable) and the necessity of energy imports, so as
to cover the daily consumer demand, the demand for exports and the necessary ancillary
services. In other words, DAS is the market where the total amount of electricity and
electricity derivatives are exchanged, which are produced, consumed and traded on the
following day in the Greek electricity market. The suppliers are obliged to buy the
amount of electricity estimated to be consumed at a specific single price, i.e. the
settlement price for energy from DAS (the so called System Marginal Price – SMP) on
the basis of which producers are paid.
The above model of a mandatory pool at a fixed settlement price differentiates itself from
models applied to other countries where the trade activity is deregulated and the
transactions take place both in regulated markets and through bilateral agreements
between electricity producers and suppliers who freely determinate the price and the
other terms of the contract (Contracts Over the Counter- OTC). The Greek model of
regulation of the wholesale market does not allow transactions outside DAS in Greece,
thus every power plant unit has to offer its total energy capacity and ancillary services to
DAS. The issuance of this model was due to the need to control the market and to ensure
transparency by HTSO during the early stages of the liberalization, when more regulation
was considered necessary in order to avoid abusive monopolistic behavior and
speculative tactics of the new players to the detriment of consumers and competitors (e.g.
price increases, jeopardy of the security of supply, securing power supply)
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