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Turkish Stream extended to the Balkans

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While the passions around the Nord Stream-2 are not subsiding, and Washington is looking for new ways to stop the project, Russia has launched the second part of the Turkish Stream (TurkStream) in the Southern Balkans. Thus, this large-scale project takes its final shape, writes Alex Ivanov, Moscow correspondent.

On 1 January, Serbian President Aleksandar Vucic launched the Serbian section of the Turkish Stream - an interconnector gas pipeline that expanded the Serbian national gas transportation system.

In the new year, 2021, Serbia joined a number of Balkan countries that use one of the main Russian energy resources, overcame dependence on Ukrainian gas transit and ensured energy stability.

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“The number of European countries that receive Russian gas with the help of Turkish Stream has grown to six. Now, along with Bulgaria, Greece, Northern Macedonia and Romania, Serbia, Bosnia and Herzegovina have provided themselves with such an opportunity, said Alexey Miller, Chairman of the Gazprom Management Board. From Russia, gas is supplied via the Turkish Stream offshore gas pipeline to Turkey, from there to Bulgaria, and through the national gas transportation system of Bulgaria, it enters Serbia and Bosnia and Herzegovina.

Two lines of the Turkish Stream will supply 15.75 billion cubic metres of gas per year, about 3 of them will be received by Serbia. Russian gas will allow the Serbs to attract foreign investors, help improve the environmental situation in the country and raise the standard of living of citizens. The festive launch of gas went like clockwork, but Russia and Serbia took a long time to reach this strategically important moment.

According to the initial plan, the entire volume of gas from the second line was planned to serve by transit through Turkey to the border with Bulgaria, where it would be done in the upgraded Bulgarian gas transport system, which is capable of transmitting 12 billion cubic meters of gas on border with Serbia. After the distribution of gas through its territory, the rest of the gas was to be supplied to the border with Hungary. By 2019, it was planned to synchronize all work on the construction of the Turkish Stream branches and simultaneously modernize the Bulgarian and Serbian gas transmission systems.

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However, when the gas pipeline was already built by the Russian company Gazprom in 2019, work had only just begun in Serbia, while in Bulgaria it was not carried out at all. Gazprom, as a reliable supplier, booked additional capacities for gas transportation through the Ukrainian corridor for gas supplies to Serbia in 2020, although this was not profitable for Russia either in terms of the economy, or even more so in the political aspect.

In 2020, work on connecting Serbia and Bulgaria to the Turkish Stream was intensified, but in the fall of 2020 it turned out that Serbia (for various reasons) does not have time to fulfill its obligations before March-April 2021. This meant that in order to organize Russian gas supplies to Serbia in 2021, Gazprom would again have to ask Ukraine, contrary to its political and reputational interests, to sell additional transit capacity to deliver gas to Serbia. President Aleksandar Vucic personally had to solve the problem.

Already in November 2020, a Russian-Serbian working group was established, working under the direct control of the Serbian leader. After President Vucic took the situation into his own hands, the construction of the gas pipeline in the country began at a new pace. The round-the-clock work of specialists and builders of the two countries has brought a corresponding result.

In total, about 6 billion cubic metres of gas will be supplied to the domestic markets of these countries. The corresponding amount of fuel can be excluded from the alternative flow in transit through Ukraine. For the Serbian consumer, the launch of the "Balkan Stream" is especially important because the price of a cubic meter of gas will now drop from $ 240 to $ 155 at the exit from Bulgaria (the cost of internal transit will be added to them, about $ 12-14). This also means a revision of the cost of connecting households to gas. Alexander Vucic called this event "great and important for Serbia" and sincerely thanked the Russian leadership. "This is an important day for our country. I would like to thank our Russian friends who participated in the construction of the gas pipeline together with us. I congratulate you on your great work, it is of great importance for the industry, the development of the Serbian economy, as well as all the inhabitants of Serbia," he said at the launch ceremony of the gas pipeline.

Russia is completing its ambitious project in the Balkans. All the countries that wanted to get gas already have it. Turkish Stream is there in the Balkans. At the time, it was not possible to implement the South Stream, but now there is another route and it works.

Electricity interconnectivity

Commission approves Greek measures to increase access to electricity for PPC's competitors

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The European Commission has made legally binding, under EU antitrust rules, measures proposed by Greece to allow the competitors of Public Power Corporation (PPC), the Greek state-owned electricity incumbent, to purchase more electricity on a longer-term basis. Greece submitted these measures to remove the distortion created by PPC's exclusive access to lignite-fired generation, which the Commission and Union courts had found to create an inequality of opportunity in Greek electricity markets. The proposed remedies will lapse when existing lignite plants stop operating commercially (which is currently expected by 2023) or, at the latest, by 31 December 2024.

In its decision of March 2008, the Commission found that Greece had infringed competition rules by giving PPC privileged access rights to lignite. The Commission called on Greece to propose measures to correct the anti-competitive effects of that infringement. Due to appeals at both the General Court and European Court of Justice, and difficulties with the implementation of a previous remedies submission, such corrective measures have not been implemented so far. On 1 September 2021, Greece submitted an amended version of the remedies.

The Commission has concluded that the proposed measures fully address the infringement identified by the Commission in its 2008 Decision, in light of the Greek plan to decommission all existing lignite-fired generation by 2023 in line with Greece's and the EU's environmental objectives. Executive Vice President Margrethe Vestager, in charge of competition policy, said: “The decision and the measures proposed by Greece will enable PPC's competitors to better hedge against price volatility, which is a vital element for them to compete in the market for retail electricity and offer stable prices to consumers. The measures work hand in hand with the Greek plan to decommission its highly polluting lignite-fired power plants by discouraging the usage of these plants, fully in line with the European Green Deal and the EU's climate objectives.”

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A full press release is available online.

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Biofuels

Commission approves one-year prolongation of tax exemption for biofuels in Sweden

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The European Commission has approved, under EU state aid rules, the prolongation of the tax exemption measure for biofuels in Sweden. Sweden has exempted liquid biofuels from energy and CO₂ taxation since 2002. The measure has already been prolonged several times, the last time in October 2020 (SA.55695). By today's decision, the Commission approves an additional one-year prolongation of the tax exemption (from 1 January to 31 December 2022). The objective of the tax exemption measure is to increase the use of biofuels and to reduce the use of fossil fuels in transport. The Commission assessed the measure under EU State aid rules, in particular the Guidelines on State Aid for environmental protection and energy.

The Commission found that the tax exemptions are necessary and appropriate for stimulating the production and consumption of domestic and imported biofuels, without unduly distorting competition in the Single Market. In addition, the scheme will contribute to the efforts of both Sweden and the EU as a whole to deliver on the Paris agreement and move towards the 2030 renewables and CO₂ targets. The support to food-based biofuels should remain limited, in line with the thresholds imposed by the revised Renewable Energy Directive. Furthermore, the exemption can only be granted when operators demonstrate compliance with sustainability criteria, which will be transposed by Sweden as required by the revised Renewable Energy Directive. On this basis, the Commission concluded that the measure is in line with EU state aid rules. More information will be available on the Commission's competition website, in the State Aid Register under the case number SA.63198.

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Energy

Biden administration aims to cut costs for solar, wind projects on public land

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Solar panels are seen at the Desert Stateline project near Nipton, California, U.S. August 16, 2021. REUTERS/Bridget Bennett
Solar panels are seen at the Desert Stateline project near Nipton, California, U.S. August 16, 2021. Picture taken August 16, 2021.  REUTERS/Bridget Bennett

The Biden administration plans to make federal lands cheaper to access for solar and wind power developers after the clean power industry argued in a lobbying push this year that lease rates and fees are too high to draw investment and could torpedo the president's climate change agenda, write Nichola Groom and Valerie Volcovici.

Washington’s decision to review the federal land policy for renewable power projects is part of a broader effort by the government of President Joe Biden to fight global warming by boosting clean energy development and discouraging drilling and coal mining.

“We recognize the world has changed since the last time we looked at this and updates need to be made,” Janea Scott, senior counselor to the U.S. Interior Department’s assistant secretary for land and minerals, told Reuters.

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She said the administration is studying several reforms to make federal lands easier for solar and wind companies to develop, but did not give specifics.

The push for easier access to vast federal lands also underscores the renewable energy industry’s voracious need for new acreage: Biden has a goal to decarbonize the power sector by 2035, a target that would require an area bigger than the Netherlands for the solar industry alone, according to research firm Rystad Energy.

At issue is a rental rate and fee scheme for federal solar and wind leases designed to keep rates in line with nearby agricultural land values.

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Under that policy, implemented by the administration of President Barack Obama in 2016, somemajor solar projects pay $971 per acre per year in rent, along with over $2,000 annually per megawatt of power capacity.

For a utility-scale project covering 3,000 acres and producing 250 megawatts of power, that is a roughly $3.5 million tab each year.

Wind project rents are generally lower, but the capacity fee is higher at $3,800, according to a federal fee schedule.

The renewable energy industry argues the charges imposed by the Interior Department are out of sync with private land rents, which can be below $100 per acre, and do not come with fees for power produced.

They are also higher than federal rents for oil and gas drilling leases, which run at $1.50 or $2 per year per acre before being replaced by a 12.5% production royalty once petroleum starts to flow.

"Until these overly burdensome costs are resolved, our nation will likely miss out on living up to its potential to deploy homegrown clean energy projects on our public lands — and the jobs and economic development that come with it," said Gene Grace, general counsel for clean energy trade group American Clean Power Association.

The renewable energy industry has historically relied on private acreage to site large projects. But big tracts of unbroken private land are becoming scarce, making federal lands among the best options for future expansion.

To date, the Interior Department has permitted less than 10 GW of solar and wind power on its more than 245 million acres of federal lands, a third of what the two industries were forecast to install nationwide just this year, according to the Energy Information Administration.

The solar industry began lobbying on the issue in April, when the Large Scale Solar Association, a coalition of some of the nation’s top solar developers - including NextEra Energy, Southern Company and EDF Renewables - filed a petition with Interior’s Bureau of Land Management asking for lower rents on utility-scale projects in the nation’s blistering deserts.

A spokesperson for the group said the industry initially focused on California because it is home to some of the most promising solar acreage and because land around major urban areas like Los Angeles had inflated assessments for entire counties, even on desert acreage not suitable for agriculture.

Officials at NextEra (NEE.N), Southern (SO.N), and EDF did not comment when contacted by Reuters.

In June, the Bureau lowered rents in three California counties. But solar representatives called the measure insufficient, arguing the discounts were too small and that the megawatt capacity fee remained in place.

Attorneys for both the solar companies and BLM have discussed the issue in phone calls since, and further talks are scheduled for September, according to Peter Weiner, the attorney representing the solar group.

"We know that the new folks at BLM have had a lot on their plates," Weiner said. "We truly appreciate their consideration."

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