Weekly Briefing, Vol. 33, No. 2 (GR), October 2020
Green Energy in Greece
A successful energy mix can guarantee sufficiency, boost sustainable development and contribute to an economic balance. Greece has embarked on an ambitious plan to use renewable energy resources at a large scale. The effort has intensified during the pandemic. While much attention is placed towards tensions in the Eastern Mediterranean which hinder the potential extraction of hydrocarbons due to political spats, Greece has entered a period of energy transition that continued in October and the early days of November 2020. The closure of lignite units in the country has sparked an interest by private companies to invest in the energy sector – mainly in renewable energy projects. This is, for instance, how energy sufficiency on the island of Crete will be achieved. But the Greek government needs to support people who will lose their jobs while developing its plan to secure additional funds from the EU. Its determination to offer incentives for companies to invest in regions that are seriously affected will be placed in the right direction.
The impact of COVID-19 on the European Green Deal is placed on the agenda of discussions in Brussels and several EU member-states. Greece believes that its long-term plan for de-carbonization will be not significantly affected. The Greek policy is grounded in its national energy and climate plan that was submitted to the European Commission in December 2020. Among other things, this plan stipulates for Greece to reduce greenhouse gas emissions by at least 40 percent compared to 1990, shut down lignite power plants by 2028, increase the share of renewable energy sources in energy consumption for it to reach at least 35 percent by 2030 and achieve an improvement in energy efficiency by 38 percent. The plan was submitted in alignment with relevant European legislation. Speaking at the Davos World Economic Forum in January 2020, Prime Minister Kyriakos Mitsotakis on the importance of green energy and the relevant commitments Greece would undertake.
Since the beginning of the year the realization of renewable energy projects has been a clear priority for the Greek government. To attract investments the government has decided to simplify the process of granting licenses. Prerequisites for a production license for that type of projects have been removed and replaced with a certificate from the so-called unified information system. In May 2020, the parliament voted its new environmental law that, among other things, simplifies the procedure for the approval of projects. The new law provides incentives to build solar farms with a total capacity from 0.5 to 1 MW whereas solar farms with a capacity from 1 to 10 MW are allowed rapid use of land for the development of renewable energy projects. It also facilitates the development of wind farms as their capacity limit is raised to from 5 MW to 10 MW.
The interest of the government in attracting investments for renewable energy projects has created momentum in Greece. Public Power Corporation, for instance, will build a cluster of solar panels, which will eventually reach a total capacity of 230 MW, in cooperation with METKA EGN and Terna Energy. It has also published the terms of the tender for the construction of a solar power plant in Megalopoli. Furthermore, Hellenic Petroleum has signed an agreement for the acquisition of a portfolio of photovoltaic projects in the area of Kozani from the German company Juwi. The project is expected to generate 300 GW annually and will constitute one of the five largest plants in Europe.
Several examples of other companies implementing or envisaging similar projects can be given. Terna Energy has been particularly active in clean energy projects. In March 2020, it announced investments worth of €550 million to construct new wind farms in Euboea. And in October 2020 it won a tender of the Centre for Renewable Sources and Energy Saving for the project: Hybrid system for the production of electricity and heat from renewable energy sources on the island of Agios Efstratios. Additionally, Copelouzos Group and China Energy Investment have harmoniously cooperated on four wind energy projects in Greece. Furthermore, as it was reported in October 2020, France’s Akuo Energy International would plan to make investment amounting at €1 billion in the next five years in Greece to develop photovoltaic systems.
On 4 November 2020 Greece and Volkswagen Group sealed their agreement to establish a mobility system on the island of Astypalea. The current transport system on the island will transition to electric vehicles and renewable power generation. Energy will be primarily generated from local green power sources such as solar and wind while the project will initially run for six years. The agreement is the result of a joint preparation that lasted several months. Mitsotakis who virtually joined the ceremony event talked about the importance of partnerships and expressed his belief that the Astypalaia project could function as a model for sustainable development not only at the national but also at the European level.
Another critical project that it is being carried out in Greece is the power linkup between the region of Attica and the island of Crete via a subsea grid. The contract was signed in June between the Independent Power Transmission Operator’s (ADMIE) subsidiary Ariadni Interconnection and the contracting companies. State Grid has been a stakeholder in ADMIE since 2018. The project is expected to be completed by 2023 and solve the problem of Crete’s energy sufficiency transferring power from renewable energy sources. It could have been part of a bigger project of EU common interest connecting Israel, Cyprus, Crete and mainland Greece. Delays, however, left no other option to the Greek government but proceed to the Greek part only in order to safeguard the energy sufficiency of Crete. The decision had been made by the previous SYRIZA government and implement by the current New Democracy one.
As far as lignite units are concerned, Greece will cease the operations of all existing ones of the Public Power Corporation by 2023 – with the exception of Ptolemaida’s unit VI that will be closed by 2028. The COVID-19 pandemic impacted on the liquidity of the Public Power Corporation. In May 2020, the European Bank of Reconstruction and Development (EBRD) proposed a loan for the company in the amount of up to €160 million. The loan agreement was sealed a few months later, in August. The EBRD has started to invest in Greece since 2015 and see the deal with Public Power Corporation as highly significant because the latter and the Greek energy sector ‘have embarked on a remarkable strategic reorientation away from coal and towards a green and sustainable model’.
Looking towards the future, the Greek government seeks to empower its financial capacity. Before the outbreak of the pandemic former energy undersecretary Gerassimos Thomas had argued that funds from Europe could reach €4.4 billion. This effort will intensify because Greece is setting up its plan to secure additional resources from the Next Generation EU recovery fund. The Greek government will also receive approximately €300 million from the Just Transition Fund which will be accompanied by national funds. What is immediately required is a diverse development model in order for the country to protect its citizens who will lose their jobs with the closure of lignite units. Western Macedonia and Megalopoli in Southern Peloponnese will be hardly hit. Energy Minister Kostis Hatzidakis appears optimistic in his public remarks the number of jobs to be created will be higher from the one that will be lost. He said that Greece would consider tax incentives to new businesses in the affected areas to support local communities and promised the strengthening on tourism and agriculture along with green energy.
Conclusion
Greece seeks to become a greener country. In so doing, it has decided to close almost all lignite units in the next three years. The COVID-19 pandemic has not derailed the plan. What can be observed in the last months, including October 2020, is an appetite shown by foreign companies in engaging in green energy projects. This tendency could contribute to a relaunching of the national economy as it is supported by governmental decisions that offer incentives for enterprises to invest. The process is very ambitious and will be paired by the effort of Athens to secure additional funds from the EU recovery fund in response to the novel coronavirus. However, it needs also to be combined by a specific plan to offer alternatives for citizens who will lose their jobs in affected regions, in Western Macedonia and Megalopoli.