By Vangelis Dourakis

“Ups and downs” in electricity pricing is brought about by the adoption of the new two-zone system of low charges.

A vital part of the domestic industry and trade, as everything shows, it will ensure cheaper electricity and therefore “scissors” considerably the current operating costs. Something that – in theory at least – will also have an impact on the prices of products and services. Accordingly, households will also pay for cheaper electricity.

The new two-zone system of reduced electricity pricing will come into force from 1 February 2025 and will initially apply to consumers who have an appropriate meter and an active two-zone (night) tariff (a meter with the ability to register in two zones or a new smart meter ).

What does a household gain with the new two-zone system?

The two-zone tariff consists of the meridian zone and the night zone. More specifically, the timetables per zone and season, which will be valid from Monday to Sunday, are as follows:

Winter opening hours, from November to March:
Meridian zone: 12 p.m. – 3 p.m.
Night zone: 2 am – 5 a.m.
Summer opening hours, from April to October:
Meridian Zone: 11 am – 3 p.m.
Night zone: 2 am – 4 a.m.

But what will this development mean for households? Let’s see it through examples:

An average monthly electricity consumption for the winter season, for a typical household amounts to 500 kilowatt hours.

65% of these kilowatt hours are consumed after 4pm. at noon and until 11 p.m. late at night, while the remaining 35% of consumption takes place during the rest of the day.

Given that the retail charge price within 24 hours follows the daily change of the wholesale electricity market, the average low price of electricity statistically hovers around 50 euros per megawatt hour or 5 cents per kilowatt hour, while in the rest of the hours it is close to 18 minutes .

So based on the above:

If the household does not move the heavy consumptions to the low-rate zone, then in this case we have 500 kilowatt hours x 65% = 325 kilowatt hours with 18 minutes, 58.5 euros per month, while the remaining 175 kilowatt hours with 5 minutes are set at 8, 75 euros. So he will pay a total of 67.25 euros in electricity for the month.

But if the household moves its heavy consumption to the low charge zones (12 pm to 3 pm) and (2 am to 5 am) it will pay 325 kilowatt hours x 5 minutes = 16.25 euros plus 175 kilowatt hours x 18 minutes = 31.5 euros , i.e. a total of 47.75 euros. The profit in this case is 67.25-47.75 = 19.5 euros or a saving of about 30%.

What do electricity producers “gain” after the changes?

But these changes bring upheavals in the operating costs for industries as well as commercial activities: Today, industry and commerce have electricity tariffs that resemble those of a household, thus raising the cost of the final product.

It is indicative that the cost of energy for the production of the same industrial product is estimated to be 95 euros per electric megawatt in Greece, while in Germany it is 44 euros and in France only 30 euros.

In this context, the Ministry of Environment and Energy is expected to encourage the adoption of Bilateral Power Purchase Agreements (or PowerPurchaseAgreements – PPAs) between “green” producers and industrial and commercial consumers.

For the RES producers themselves, the main benefit is that the so-called PPAs secure bank financing for their projects, as the future cash flows of the projects can be easily predicted, while also making them sustainable.
Here it should be noted that today the RES producers at noon are forced to make the energy they produce available at very cheap prices.

If this continued it would be difficult for them to meet their obligations and sooner or later they would face the possibility of becoming unsustainable.

The “transfer” of the “preferential” cheap tariff during lunch hours is considered to increase the demand for energy, thus allowing the RES producers to put a “brake” on the “downhill” of the prices they sell their product.

The profit for industries – traders and … possibly consumers too

On the other hand, industry and trade through PPAs will be able to compensate for any risks from fluctuations in energy prices, as they guarantee a fixed price for any agreed period (e.g. one year) and at low levels, especially since as mentioned above during lunch hours there is an overproduction of “green” energy.

At the same time, with the cheap pricing at noon – and given that these are peak hours for the activities in question – production and operating costs will be significantly reduced, with what this of course implies in the prices that the consumer of an industrial product will have to pay in the end or a commercial service.

All of course at a theoretical level and it is sufficient for the scenario in question to work in practice, which does not simply concern, as was analyzed, the adoption of cheap charges at midday instead of at night, but will bring “global” changes in energy costs, which must be households also “fruitful”.