Greek energy sector

The Greek energy sector is still largely dependent on fossil fuels, most of which are imported. As of 2017, about 49% of its energy requirements are covered by petroleum products alone. These petroleum products are not only used in the transport sector, but they are also converted in relevant amounts into electricity. In particular, the non-interconnected Greek islands obtain their electricity primarily from inefficient and expensive diesel generators. In total, the extra cost that had to be recovered in 2017 through a public service obligation is estimated at around EUR 600 million to subsidize the electricity tariffs in those areas. Natural gas, which also has to be imported at a significant cost, plays a growing role in meeting energy requirements.

Domestic energy sources include lignite, which accounted for around 29% of electricity generation for the year 2018 as well as renewable energy sources (RES) such as hydro-power, wind, solar energy and biomass, which accounted for 11,3%, 12,4%, 7,5% and 0,6%, respectively.

A national target of a 20% RES share in gross final energy consumption by 2020 had been defined under Law 3851/2010, exceeding the national target of 18% according to the EU Directive 2009/28/EC. In 2018 the RES share in gross energy consumption reached 18%, thus achieving the RES target under EU
Directive 2009/28/EC for 2020. The RES shares in electricity, in final consumption for heating/cooling and in transport are 26%, 30% and 4% respectively. Specific targets for RES electricity share (40%), RES heating and cooling share (20%), and RES transport share (10%) have been defined in order to achieve the national RES target until 2020.

Non-interconnected Islands

The electricity systems on the non-interconnected islands (NIIs) are small, therefore, they cannot benefit from the cost advantage of large-scale generation capacity and commonly rely to a large degree on diesel-fuelled generators, which are expensive and not environmentally friendly. The Greek regulatory system provides for a public service obligation (PSO) to supply electricity to consumers on NIIs at the same electricity tariffs as consumers on the mainland. Island suppliers are compensated for the difference between their (high) generation costs and the system marginal price on the mainland through a fund that is financed by a levy charged to all electricity consumers. The total cost for this PSO is in the range EUR 500 million to EUR 700 million per year.

While the potential for renewable energy on Greece´s NIIs is very high, the integration of such resources into the small island systems is complex due to seasonal demand, absence of storage, and technical restrictions related to the variable nature of wind and solar power. Hence, the installation of variable renewable energy source capacity is subject to constraints, in order to secure a continuous electricity supply to NIIs.

Towards this direction, the relevant framework for RES hybrid plants, namely the combination of one or more RES with a storage system, allows the increased exploitation of the local renewables potential in a system-friendly manner, making it possible to fully replace the diesel-fuelled generators.
These hybrid plants must fulfil several conditions, set by regulatory framework, inter alia a minimum energy capacity of the storage system and a contracted guaranteed power.

The focus is put on either the integration of non-interconnected systems into the mainland transmission system or the enhanced installation of storage systems, based on their economic and technical feasibility. Interconnections are also critical for the government´s energy policy, to enhance the security of electricity supply and to support the development of renewable energy sources so that Greece can meet its renewable energy and GHG reduction targets. The benefits of enhanced connectivity of the NIIs with the main grid will include avoided cost in terms of diesel generation and reduction of the PSO for all electricity consumers.

Market situation for renewable energies

Solar energy is playing an increasingly important part in the energy mix of Greece. The country has high levels of solar irradiation with an average global horizontal irradiation level of more than 1500 kWh/m2. With around 4,1 million m2 (2,9 GWth) of solar thermal systems installed, Greece has the second largest total capacity in Europe after Germany. It also has the third largest per capita ratio of installed collector surface after Cyprus and Austria. Around 243 000 mІ (170,1 MWth) of solar thermal systems have been installed in 2012. The Greek market mostly consists of individual solar water heaters of the thermosiphon type. There is still a significant potential for larger solar thermal systems in the tertiary sector and in industry.

There has only been a marginal increase of 1 MW in the installed solar PV capacity in 2016 compared to the figures at the end of 2015. The total installed solar PV capacity by the end of 2016 accounted for 2605 MWp, out of which 375 MW of small PV systems below 10 kWp have been installed under the Special Photovoltaic Rooftop Programme. Only 6,1% of the total PV capacity is installed on the non-interconnected islands (NIIs). In 2016, a total of 3417 GWh was produced by solar PV which thus became the third most important RES in terms of generation (after large hydro-power and wind power), producing 25,4% of RES electricity and 6% of total electricity in Greece. A total of 512 GWh was produced by PV systems on rooftops which have been installed under the Special Photovoltaic Rooftop Programme.

Greece has some of the most attractive sites for the use of wind energy in Europe, with average capacity factors of around 25% for the mainland and 30% for the islands. The economic wind energy potential in Greece is estimated at 10 000 – 12 000 MW.

National Energy and Climate Plan

The National Energy and Climate Plan (NECP) is the Greek government´s strategic plan for climate and energy issues, setting out a detailed roadmap regarding the attainment of specific energy and climate objectives by 2030.

The plan sets new ambitious targets to be achieved by 2030. The targets include 35% share of RES in gross final energy consumption; 60% share of RES in gross final electricity consumption; 40% share of RES in final energy for heating and cooling; more than 14% share of RES in final energy for transport; reduction of final energy consumption by 38% compared to the respective forecasts of 2007; reduction of total greenhouse gas emissions by at least 40% compared to 1990.

These targets are supposed to be achieved through a combination of measures for energy efficiency and the large-scale penetration of RES technologies in electricity production, heat supply and transport sector.

With regard to renewable energy sources, the objective for gross final energy consumption is 35%. This is also much higher than the core EU objective for RES of 32%. Provision has been made for the RES share in electricity consumption to exceed 60%. In this context specific initiatives are already being promoted and implemented by the government, e.g. simplifying and speeding up the licensing framework, ensuring optimal integration of RES in electricity networks, operating storage systems and promoting electric mobility.

A key objective in NECP is the programme for reducing the share of lignite in power generation by implementing a relevant front-loaded programme in the following decade and putting a complete end to the use of lignite for power generation in Greece by 2028. The NECP also sets out the timeframe for shutting down the lignite-fired power plants that are currently in operation by 2023.

According to the Natural Gas Market Roadmap, provision is made for the construction of the 3rd LNG tank (increase of LNG storage), upgrade of berthing facilities (projects completed in 2018), and completion of works to further increase the rate of gasification of the Terminal´s drainage capacity and the implementation of the project of the underground gas storage facility in South Kavala.

Regarding the preparedness of Greece and of stakeholders to respond to the limitation or interruption of energy supply, provision is generally made to maintain and/or enhance current gas related measures through the new, updated versions of the Preventive Action Plan and the Emergency Action Plan based on the recent results of the National and Joint Risk Assessment Study, and through the solidarity mechanism between neighbouring Member States that the country is required to adopt in accordance with the requirements of Regulation (EU) 2017/1938.

There is a need to complete the existing interconnections and to design new international interconnections with pipelines from third countries. In addition, these actions will contribute to the diversification of energy sources and supply routes from third countries. More specifically, with regard to the electricity market in the next decade, the following interconnection projects are being implemented/promoted – second Greece – Bulgaria interconnection; support through the implementation of the interconnection of Crete in the context of the Greece – Cyprus – Israel interconnection project; upgrading the Greece – Republic of Northern Macedonia interconnection.

The Floating Storage Regasification Unit (FSRU) in Alexandroupolis has attracted the interest of investors wishing to obtain a holding in the share capital of the company implementing it. It has attracted the attention of suppliers expecting to enter the Southeast and Central European market, thus contributing to the elimination of monopolistic regimes. It has attracted the interest of final consumers in this geographical area wishing to have direct access to more competitive gas prices in order to reduce their production costs. This has been designated as a project of common interest and its effect in conjunction with the IGB pipeline at a regional level is decisive in making Greece a real hub in the gas market. The aim is for the Hellenic Energy Exchange to put in operation a trading platform in the context of the gas market in 2020.

Similarly the construction of the underground gas depot in the offshore field of South Kavala, which is being depleted, is an energy infrastructure that can offer a variety of mechanisms for supporting measures to mitigate and/or prevent supply security crises in Greece and contribute both toward ensuring balance in the transmission system and increasing competition, which will have a direct impact in reducing energy costs. Moreover, this infrastructure, in conjunction with the FSRU project in Alexandroupolis and the TAP and IGB gas pipelines, is very important for the Greek and Balkan markets. The underground depot can be used for the long-term storage of sufficient quantities of natural gas either for commercial purposes or for use in case of an emergency that could have a significant impact on Greece´s supply. The current gas market, the existing infrastructures and the fact that power generation depends greatly on imported natural gas stress the need to construct the underground depot, which will serve as an additional entry point in the transmission system.