Creating a Clear Roadmap for RES Investments

With the energy transition at the top of its agenda, the Greek government has committed to making landmark policy changes to lure “serious investors to engage through a transparent system,” says Alexandra Sdoukou, Secretary General of the Ministry of Energy and Environment, underlining that a reform package targeting energy storage, offshore wind, and the slashing of licensing procedure times will be completed by the first semester of 2021.

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GIG: Shortly after you assumed your role as Secretary General in July last year you warned that actions required to address climate change and enable Greece’s energy transition would bring about an upheaval of the economy. Why is this?

Sdoukou: When this government came into power we knew we had a massive job ahead of us in energy and the environment. This entailed promoting energy security while also boosting investments into the sector and our country; both crucial priorities. Meanwhile, our actions needed to be aligned with EU guidelines and directives, such as the EU’s climate change pledge. With this in mind, a central decision was made early last year to reform the energy sector, aiming for the best use of our resources.

Prime Minister Mitsotakis delivered a speech in September 2019 at the 74th UN General Assembly announcing our decision to shutter Greece’s lignite plants. The move was received with great surprise; nevertheless, it comprised part of our policy plans right from the beginning. We had reached the conclusion that fighting climate change could go hand in hand with the transition of our energy system, providing us with an opportunity to phase-out coal power production, which is expensive and dirty

This transition is not only driven by environmental ideals; electricity generated from lignite units is no longer economically viable in Greece. For example, coal is expected to contribute about 5.5 terawatt hours of Greece’s electricity consumption in 2020, which corresponds to 10% of the country’s power supply. In previous years, this figure was over 35%, which clearly demonstrates that lignite power plants are no longer economically efficient.

Our vision is based on getting rid of lignite and replacing it with a new green energy system. We are now in the midst of this critical transition. We are focusing on increasing the competition among clean energy sources and we are also considering the use of natural gas as a bridge fuel, enabling us to reach our green energy goals.

GIG: What role will Greece’s energy transition play in Greece’s economic recovery, particularly as it prepares to tap into the EU Recovery Fund?

Sdoukou: The European Union sets the overall direction. A few months ago, for example, we learned that the bloc’s recovery plan would mainly focus on boosting investments towards digitisation and green energy. Regarding Greece specifically, of the €32 billion that have been earmarked to the country, 30% – around €10 billion – will be allocated to green investments. These funds will be channelled through our Ministry, and it is up to us to shape these policies and attract these investments. So, I strongly believe that the next three years will be catalytic for the recovery of the Greek economy and the green transition will play a driving role.

GIG: What is your assessment of the European Green Deal? Many have claimed the plan is not ambitious enough.

Sdoukou: Greece has always been a passionate advocate of the Paris Agreement and the European Green Deal. We need to recognise that the European Commission responded very quickly to calls from the European Parliament to address climate change. Thanks to this, the EU aims to become the world’s first climate neutral bloc by 2050, which translates into an economy with net zero gas emissions. This goal encompasses all economic sectors, ranging from electricity and transport to agriculture and manufacturing.

So, the EU is pushing forward an ambitious plan and Greece is strongly supporting it, making it a driver for our new National Energy and Climate Plan (NECP), published in November 2019. Our new plan aims to phase-out coal, increase the contribution of RES in the energy mix, and boost the role of electric vehicles and energy efficiency.

Having said that, the European Green Deal could be more ambitious, but I still think that this is a dynamic plan. It has been very effective in the sense that it has provided EU countries with an initial blueprint of what they should aspire to achieve. I’m confident that by the end of 2020 we’ll know whether we’ll move towards more ambitious targets.

On June, Greece’s National Plan for e-mobility was announced, in line with the EU Green Deal growth strategy. Copyright: Ministry of Energy and Environment

GIG: Prime Minister Mitsotakis committed to the phase-out of 80% of lignite-based energy production by 2023, with a complete switchover set to be achieved by 2028. Are you on track to meet this goal?

Sdoukou: Absolutely; we wouldn’t have made this commitment unless we were confident we could honour it. However, I believe the phase-out of coal will be one of the most arduous tasks undertaken by our government, as this is not an exclusive task of our Ministry and, rather, entails a broad and coordinated effort. Despite the challenges and given our initial initiatives and successes, I’m confident that our plan to phase out coal will proceed according to the set timeline.

GIG: What concrete steps have been taken so far?

Sdoukou: To begin with, two coal-based plants totalling 600 megawatts of installed capacity have already been shut down, and we are expecting a third plant to shut down about six months ahead of schedule. We have also made progress with regard to the issue of heating, given that the heating of the lignite regions is dependent on lignite plants. In fact, a few weeks ago, the state power utility PPC commenced trials of its biomass plants, which are set to contribute to the region’s heating needs.

The public consultation of the Master Plan concerning the energy transition of the lignite regions was recently completed and we are making the finishing touches taking into account the comments and proposals that we have received. The most crucial years concerning the energy transition of the areas will be the years after 2022. Our main goal is for miners and electricity plant workers to remain employed, and we foresee their professional relocation to jobs associated with the recovery and repurposing of the land currently used by the coal industry. For this, the Greek government will be sourcing €300 million in EU funds and directing them towards the repurposing of these lands following the closure of the plants.

GIG: The Ministry’s Master Plan foresees the allocation of €5 billion to offset the impact of the coal phase-out, targeting areas such as Western Macedonia and the Southern Peloponnese, which are highly economically dependent on lignite mining. Is a just transition possible?

Sdoukou: It goes without saying that the main challenge we face is ensuring a fair transition, and I strongly believe that a just transition is possible. I’m very confident of this because our Master Plan is an inclusive and well devised project, centred on the creation of sustainable jobs and the wellbeing of the people in the lignite regions, by focusing on five pillars: clean energy, commerce, industry, smart agriculture, and eco-tourism along with technology and education. We are triggering a series of investments towards each of these pillars, and I believe it is of utmost importance that we see investments materialise as quickly as possible.

For example, on the clean energy front, we have already begun the development of an emblematic PV investment in Kozani, Western Macedonia, totalling 2.2 gigawatts of installed capacity. In Megalopolis, we are also working towards a 550 megawatt clean power project, which is currently in the design phase. There is also strong interest in hydrogen-based investments and in the development of energy storage facilities.

On the industry front, private investors have expressed their interest in establishing an electromobility park, which would entail a €200 million project in Western Macedonia. And there are many more proposals under consideration. What matters is that we see a lot of domestic and foreign investors planning to get a foothold in the sector, and we are committed to doing everything in our power to support them by establishing a framework that is conducive to investments.

We have estimated that around 8,000 new jobs can be created in lignite regions by 2028. Therefore, yes, I am confident that we will achieve a just transition, according to our National Energy and Climate Plan and the renewable energy targets that we have set out to achieve.

GIG: According to independent estimates, the renewable energy targets established in Greece’s National Energy and Climate Plan (NECP) entail a minimum of €6 billion worth of investments by 2030 in solar and wind energy generation alone, in a bid for 35% of energy to derive from RES. How does the Ministry plan to achieve this considering ongoing challenges relating to the licensing procedure of projects? What role do you expect investors to play?

Sdoukou: According to our NECP, the country aims to install nine gigawatts of new solar and wind power capacity by 2030. Today, Greece’s cumulative solar and wind power is about seven gigawatts, meaning we need to install nine more gigawatts. Based on these numbers, it is clear that renewable energy will be the main driver of Greece’s electricity system by 2030. Furthermore, according to our calculations, this actually entails €9 billion worth of financing directed towards renewable energy development. In addition, we estimate that another €35 billion will be invested in green infrastructure, energy efficiency, recycling and innovation, among other areas.

In order to attract the necessary investments, we are working on policy reforms that will allow both domestic and foreign investors to step in and contribute to our energy system’s transformation. We have already set up a number of modern instruments, including new digital tools and processes to make it easier and more straightforward for investors to get involved.

A great example of this relates to the licensing of renewable energy projects. For years, licensing has been a burdening and time consuming procedure, leading investors to waste time with red tape and incur additional costs. There is no country that can afford to make investors wait six to seven years –on average – to complete the licensing of their projects.

Therefore, we have set up a digital licensing process that allows for speed and transparency, reducing the time required for the issuance of the first license down to 30 days. The system, which was set up by Greece’s energy regulator, will allow investors to apply, check the process of their application, and receive notifications online. And while we are currently allowing some time for stakeholders to adjust to this new system, this has already sent an important message: Investors cannot be made to wait two years, and processes need to be expedited leveraging digital services.

In addition to creating this digital platform, we have also made changes to the underlying procedure to reduce unnecessary red tape and reduce the time required for the regulator’s evaluation of applications. While these changes benefit investors, they also benefit the country, encouraging serious investors to engage through a transparent system.

We are now working on the second phase of this process during which we will introduce a new draft law to parliament, comprising additional amendments to the licensing procedure.

After an investor receives the regulator’s approval, they must then engage with the transmission system operator (TSO) or the distribution system operator (DSO), which entails another one to two years. Once this is completed, an investor then needs to apply to the Ministry for an operation permit. This means two different licenses, and an average three-year waiting period. Therefore, we are currently working on tracing all unnecessary steps to either slash them from the process or unify them, in an effort to create a clear and straightforward roadmap for investors.

I am certain that we will find the right solutions. By the end of our tenure, I am confident that we will be able to grant a license for renewables in two years instead of seven, as it stands today.

GIG: Since the implementation of the RES auctions system, the market has seen a considerable reduction in tariffs. What is the strategy moving forward?

Sdoukou: Greece has committed to continue the successful and transparent tender scheme that’s currently in place for renewable energy capacity, and we are in the process of drafting a new auction model that will apply in the years to come.

The auction system is making our renewables market more competitive, steadily reducing the price of renewable energy. The ultimate aim for every country is to source cheap energy to provide consumers with low-cost electricity. With this in mind, and given our excellent natural resources, we believe Greece will be able to attract capital for investments in the energy sector and pave the way for a new decarbonised energy market. This effort is ongoing.

Solar park in Greece. Copyright:Ekaterina Kondratova / Shutterstock

GIG: What additional reforms should we expect concerning the RES sector ?

Sdoukou: We recently announced a cohesive package of measures that enhance the role of RES in the green transition, combined with structural reforms for the gradual liberalisation of the market to the benefit of the economy.

Taking note of the adverse effects of the pandemic on the RES Special Account balance, we had to tackle the problem of the account’s deficit with extraordinary, one-off measures that offset the COVID-19 impact. At the same time, though, we took the opportunity to introduce more structural measures that aim to restore the long-term balance of the account, to create an important liquidity cushion and to ensure its viability in the foreseeable future, by increasing and diversifying its revenue streams without placing additional burdens on electricity consumers.

Moreover, we have created a framework that allows the RES sector to operate on more competitive terms, by streamlining the process and expanding the scope of RES auctions, and by encouraging market participation within the environment of the new – Target Model compatible – electricity markets, which went live on 1 November.

Besides the simplification of licensing, we have publicly stated that we would like to have a new legal framework for storage and offshore renewables. Each of these three policy areas is very large and demanding from a technical perspective.

So, we have three policy fronts that are open at this moment: energy storage, offshore wind, and further cutting down the duration of the licensing process. It is our goal to complete this reform package in the first semester of 2021.

Last but not certainly not least, we initiated the revision of the RES Spatial Plan. This was deemed necessary, given that the current Plan entered into force in 2009 and it is out of date to some extent. We need a new RES Spatial Plan that will take into account the ambitious targets for RES penetration as set by the NECP on the one hand, along with progress in the “established” RES technologies and the introduction of new technologies (offshore wind, storage units, hybrid RES plants etc.) on the other.

In this context, the revision of the RES Spatial Plan that is underway will clarify and update the requirements and land consideration issues for the development of new RES plants, and will ultimately lead to – in parallel with the revised licensing process – a modern framework for the further licensing and siting of RES-e plants in Greece.

Through all the reforms that I mentioned, the Greek government aims to establish a new standard for RES development, which will encourage new investments in the sector, while simultaneously incorporating the best European practices for environmental protection.

GIG: What is your view on the development of Greece’s offshore wind and floating solar capacity?

Sdoukou: It’s clear that offshore wind and floating solar technologies lack the maturity of onshore wind farms and mainstream photovoltaic projects, respectively. And yet, these are very promising emerging technologies that can create unquestionable synergies with Greece’s geographical and morphological particularities.

There is a tremendous offshore wind potential in Greece. With regard to floating offshore assets, there are also strong indicators that in a few years, the cost to generate electricity from floating offshore plants will drop significantly. And this will be on a par with mainstream technologies.

The European Commission is undertaking a study and will publish guidelines for offshore energy policies very soon. Right now, Greece is carrying out an open internal discussion focusing on the development of a comprehensive regulatory framework that will include the best international practices.

GIG: The Hellenic Wind Energy Association (ELETAEN) has proposed kick-starting the offshore sector with a pilot project. Is this something you are considering?

Sdoukou: From a strategic point of view, yes, we believe in pilot projects. They send a positive message that the political leadership believes in the technology and I would like to assist in developing this proposal further over the next three years.

However, I think we need to fine-tune this proposal further to answer pressing questions. For example: Who is in charge of granting the license? Or, should the investor apply independently and then proceed? Each country has developed the sector through different models with varied degrees of centralisation. While we are still in the learning process, there should be no doubt that we have the political will to proceed and see how this project unveils within the next few years.

Offshore wind farm. Copyright: TebNad / Shutterstock

GIG: How will the completion of Greece’s grid interconnection projects connecting the islands to the mainland impact RES opportunities?

Sdoukou: We have set out to complete all interconnections by 2030. This is crucial. We have an ambitious island interconnection plan currently underway, which is one of the keys to unlocking and exploiting renewable energy potential on and around Greece’s islands. Interconnections also present an opportunity to replace polluting and expensive energy generation assets on the islands with cleaner and cheaper electricity from the mainland electricity system.

It’s important to bear in mind that all of Greece’s electricity consumers pay for the electricity consumed on the islands through their electricity bills by way of a public service obligation. Therefore, linking our islands to the mainland grid brings both economic and environmental benefits.

GIG: How will the implementation of the EU target model impact the sector?

Sdoukou: The implementation of the EU target model came into effect on the 1 of November, without technical glitches. The go live process was seamless and all new markets, including the day ahead market, the intra-day market, and the balancing market are up and running.

We were the last country to implement this model, something we are not proud of. Had we done this sooner, Greece would likely have a much more competitive energy market today, with lower energy prices, and a level playing field for all players.

However, there is no point in dwelling upon the past. We are looking towards the future and we are confident that soon the benefits of the new model will be unlocked and be visible to all stakeholders in the energy market.

GIG: How is the Ministry supporting Greece’s main cities to become more climate resilient within the scope of mobility and transport?

Sdoukou: This is another project of crucial importance for the government that the Prime Minister has taken upon himself to personally spearhead. I’m very glad to see how everybody is now talking about e-mobility and clean transport. We recently passed the first e-mobility law in Greece, which provides a holistic framework including everything from cars across to public transport.

The vision behind this effort goes beyond the environmental benefits; it presents the opportunity to create a new industry. We see a niche market in e-mobility, and we are expecting a significant amount of investments given that we have less than 1,000 electric cars and less than 100 charging stations at present in Greece.

We have set a very ambitious target for one out of every three new cars to be electric by 2030. To achieve this, we have launched a number of measures and policies, such as the first subsidy programme in Greece for e-mobility dubbed “Moving Electrically”, which will be open until the end of 2021.

We allocated €100 million euros towards subsidies for the acquisition of electric cars, motorcycles, bicycles, and the installation of smart charging stations for personally use. And the response to this has been truly impressive: Whereas only 200 electric cars were sold in Greece over the past four years, our new programme led to the purchase of 470 electric cars and 5,000 electric bicycles during the first two months of the programme’s implementation. And this is only the beginning of our efforts to promote electromobility in the country.

We have already started international investments in the sector. A great example is the government’s collaboration with the Volkswagen Group for a project involving the transition of the island of Astypalea’s current transport system to electric vehicles and renewable power generation, that aims to establish the island as a model for climate-neutral mobility. In fact, Astypalea is showing the way for the green policies that we are implementing in the whole of Greece!

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