Greece will have to pay even more for electricity from September

New increases in electricity bills are coming in September. Will the Greek authorities be able to support the population?

The government will need up to 1.5 billion euros in subsidies to keep tariffs at 0.15-0.23 euros per kilowatt hour. It aims to cap the €5 billion increase in electricity bills that households and businesses are expected to bear in the second half of 2022.

Experts’ estimates force the Ministry of Environment and Energy and the Ministry of Finance to provide such subsidies in order to keep the price of a kilowatt-hour at a level of 0.15 to 0.23 euros. In August they amounted to 1.136 billion euros (through the energy transition fund and the state budget), but in September this amount will no longer be enough.

To date, the international price of natural gas (TTF) continues to rise to the level of 200 euros per megawatt-hour, the wholesale electricity market is in the region of 400 euros per megawatt-hour. According to market representatives who take this data into account, the growth in retail electricity prices will be approximately 23%. At the same time, experts do not exclude that the “low” price of 0.486 euros per kilowatt-hour by September will remain far in the past.

In September, consumer prices are expected to exceed 0.60 euros per kilowatt-hour to cover high electricity costs, and the government will need at least 1.5 billion euros for subsidies.

The €5bn cost increase in the second half of the year is expected to be covered by income from the interim wholesale market facility (restriction on over-reimbursement of electricity generators) and €1.5bn from the state budget.

Since August, the government has launched a new interventionist policy (a socio-economic system based on government intervention in the functioning of society) regarding electricity bills. Since the temporary mechanism for the return of part of the income of power generators has been in place since the second decade of July, last month it raised 500 million euros. This money, together with 300 million euros from the state budget and other revenues from emission rights and renewable energy sources, was allocated for subsidies in August – they amounted to 1.136 billion euros.

The mechanism for reimbursement of a part of the wholesale market revenues for August is likely to provide an opportunity to raise 700 million euros. Another 300 million euros are planned to be allocated from the state budget this month. It is also expected that the government, in an effort to stimulate the liquidity of the electricity market, will advance subsidies. According to CNN Greecepower generators and electricity providers have already applied for such a measure, citing the relevant government regulation.

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