Capacity Allocation debate for Prinos

Prinos Installation in Kavala - Greece

The market favors a "formula" similar to current European practice for the way capacity is allocated in the underground CO2 storage facility in Prinos, rejecting the proposal of the Ministry of Energy and Mineral Resources, as reflected in the bill under consultation , with one part being allocated regulatoryly and the rest through a tender based on price.

The above results from the meeting held on Friday at the Ministry of Environment and Energy under the leadership of Deputy Minister of Environment and Energy Nikolaos Tsafos and the participation of representatives from the companies TITAN, AGET Heracles, HELLENiQ ENERGY, Motor Oil, Energean, DESFA and ΗΕRΕΜΑ, which currently constitute the Greek "ecosystem" in the area of ​​carbon capture and storage, both from the perspective of the design and development of CCS projects and from the perspective of emitters, with EDEYEP being the competent state body to "run" the entire project.

The discussion, as reported by competent sources, was "monopolised" by the issue of capacity allocation, with market representatives arguing that the European and global example of the relevant industry should be followed as opposed to the "originality" attempted with the relevant provisions of the bill.

This practically means, as the same sources explain, that a unified method of allocating capacity without discrimination should be adopted, partly in a "regulated regime" and partly in a tender, as in this case distortions may be created both in terms of allocation to participants and, even more so, in terms of price formation, a fact that could be "fatal" for the development and maturation of the CCS value chain as a whole.

Why the market disagrees

Additionally, the unified distribution method is consistent and corresponds better to the Greek reality, with the storage capacity of Prinos reaching a maximum of 2.8 million tons of CO2 per year and the needs of emitters already estimated at 4.3 million tons, which should "balance" in some way with regard to the proper functioning of the infrastructure, without constituting a basis for the creation of scarcity conditions and with what this may entail in the formation of final prices.

In this light, market representatives, as reported by competent sources with knowledge of the discussion that took place on Friday, support the need for a unified way to develop storage space without breaking capacity, in analogy with European practice.

The latter is distinguished either in a purely regulated regime or in an agreement following bilateral negotiations, without in any case, as market sources underline, having implemented a hybrid model that includes both regulated allocation and capacity allocation through tenders as proposed in the context of the bill under consultation.

The Greek case, given that the project is a Project of Common European Interest and therefore there should be a tendering process, is consistent with the "formula" of tenders, with the proviso, however, as noted above, that other criteria will apply in addition to the price criterion in order to avoid the "imbalance" that will be created on the basis of higher demand versus lower offer.

Simultaneous implementation could be one of the criteria for conducting the tender process, with market representatives emphasizing to the Ministry of Energy and Infrastructure that in any case, any criteria should be determined transparently and objectively, ensuring the right of access to the infrastructure.

Pricing method and CCfDs

The list of market demands is completed by the pricing method and the establishment of a CCfDs support regulation. Regarding the pricing regulation, market representatives supported the need for a regulation with a specific cost-orientation process to ensure and maintain the competitiveness of the supply chain, which means being able to implement the necessary adjustments so that the “final numbers” remain stable and sustainable.

This is, as competent sources clarify, a difficult exercise given that there is no previous experience in the Greek market with the relevant burden, based on what the bill states, which is expected to be undertaken by the Waste, Energy and Water Regulatory Authority.

Beyond that, the request for a regulation to support CCfDs concerns the sustainability of the projects and stems from the overall European practice and vision of supporting these projects in their first steps until they achieve a given level of maturity and sustainability that will allow them to be "freed" from the fluctuation and volatility of CO2 prices.

In this direction, the Commission plans to launch the "Industrial Decarbonisation Bank" from April 2026 with a large part of the available funds earmarked for CO2 capture and storage projects to compensate precisely for the fluctuation in the price of the ETS.

It is worth noting, as market sources report, that these projects become viable at CO2 prices of around 140 euros per ton when the price currently ranges around 80-100 euros per ton.

The situation is expected to change with the imminent rise in carbon dioxide prices over the next decade, which under the CCfDs regime will also mean the recovery of money in favor of the state and, in a sense, the return of the funds that will now be allocated to support the projects.

Aid for storage in Ravenna

In any case, the Ministry of Energy, as the same sources report, is listening to the market's requests, declaring its intention to review the method of capacity allocation, also utilizing the relevant European experience, while it will do the same for the CCfDs segment.

Additionally, as noted, the final plan will also include the storage infrastructure in Ravenna, with the legislative framework including special provision for supporting the differential cost for the quantities that, due to the lack of available space in Prino, should be directed to storage there.

This regulation is considered particularly necessary to complete the relevant supply chain, as otherwise, it would remain incomplete until the storage capacity of Prinos is reached, with the "excess" amount of CO2 being bound to ultimately end up in the atmosphere again.

source: energypress.gr