GIG: The transformation of Greece’s largest power company – PPC – is taking place in tandem with the country’s ambitious energy transition, with subsidiary PPC Renewables (PPCR) in the driving seat of the energy giant’s green portfolio. Having assumed the leadership of the company in September 2019, what role is PPCR playing in the attainment of Greece’s energy transition goals?
Mavros: We are living in an era of tremendous changes in the energy market, with the energy transition being essentially about three pillars: decarbonisation, decentralisation and, of course, digitisation. And this is why these three aspects constitute the pillars of the PPC group’s investment plan.
On the one hand, decarbonisation is the lignite phase-out which is very important in terms of both climate and economics, and where Greece has a very important role to play. On the other hand, decentralisation entails creating a different production model. For the past decades, we’ve relied on centralised production plants for electrification, whereas now energy production is being carried out across the country through different plants and renewable energy sources. Monetising energy is about reducing costs, and renewables are the cheapest source of electricity in addition to being a form of energy democratisation – everybody can contribute to this process.
And last but not least, we are focusing on digitisation. Decarbonisation and decentralisation require a great deal of grid, while an efficient use of the grid calls for digitised procedures.
Targets have been set out to reach 9.2 GW of installed renewable energy capacity by 2026, out of which 4.8 GW will focus on traditional or mainstream renewables (i.e. photovoltaics, wind parks, small hydro plants, biomass, and geothermal energy), while the rest will be large hydropower plants.
As for PPCR, we have a €3 billion investment plan focused on the development of 5 GW of renewables by 2026, underpinned by organic growth, strategic alliances, and M&A activity.
Our goal is to operate 40% of Greece’s renewable energy capacity by 2026. And while we are mainly focused on photovoltaics, it’s important to note that we are the only company in Greece that is active in all forms of renewable energy technologies. Our ambition is to drive Greece’s energy transition.
In addition, 15% of our investments will be directed towards the Balkans, whereas the rest will target the Greek market to max out our portfolio in the country.
It’s worth noting that PPCR’s plan has been revised upwards at least twice. Why? Firstly, because our group has a very ambitious plan, as a vertically integrated player, to enlarge our production facilities through renewables. Secondly, because we need to have a critical mass of renewables for power generation to supply our parent company’s business. And thirdly, because the recent energy crisis has underscored the need to speed up our energy transition goals to ensure access to low-cost electricity. Fossil fuel prices, especially natural gas and CO2 emissions prices, have rendered fossil-fuel derived electricity to be very costly.
GIG: The energy crisis has actually put energy transition plans across Europe in the spotlight. Is the energy transition to blame?
Mavros: The energy crisis is attributable to the spike in fossil-fuel prices coupled with this market’s respective volatility. If we had been investing in the development of renewables and new energy technologies 10 years ago, this crisis would never have unfolded. So, it’s not the energy transition that is creating the energy crisis, it’s the energy transition that will allow us to look to the future with the ambition of never seeing ourselves in this situation again.
GIG: Is there sufficient geographic space to develop the installed capacity that Greece needs to fuel its economy? Is this viable?
Mavros: On the one hand, yes, there is enough space, and on the other, and most importantly, one of the main ambitions of the energy transition should be to improve grid interconnections – across the board – to increase international energy trading. Only a fraction of electricity is currently being traded among countries in this region, and this needs to increase.
GIG: You recently signed a landmark deal with Germany’s RWE Renewables for the establishment of a joint venture that will develop close to 2 GW worth of PV projects in Greece. Can you tell us about this deal? What are the benefits of partnering with RWE?
Mavros: This partnership creates strong benefits for the PPC group with it being the first time the company has inked a global deal, truly placing it on the world stage. RWE is a global organisation that is driving a path parallel to our own, with an ambitious decarbonisation strategy. They are one of the largest energy players and have already secured close to 10 GW of installed RES capacity, spread across the globe.
When this performance is coupled with PPCR’s unique knowledge, track-record, and relationships in the Greek energy market, it’s easy to comprehend how joining forces will contribute to accelerate the successful deployment of renewable energy projects.
So, what we’ve done is we’ve created a joint venture company – where RWE Renewables and PPCR hold, respectively, a 51% and a 49% stake – with the aim of jointly realising RES-based projects in Greece. PPCR has brought nine PV projects to the table for a total of 1 GW, whereas RWE Renewables, for its part, has secured a Greek PV project pipeline of a similar size. And while these projects are all at different stages of development, we expect the advanced projects to start operating in 2023, while a second round should come online in 2025.
We expect this partnership to contribute to the advancement of PPCR’s objectives in multiple ways. Based on their footprint and size, RWE has advantages in the procurement world, so we are going to take advantage of their global agreements with suppliers to help us better deploy projects. Likewise, RWE has access to improved financing terms because they’re a global player. And finally, we’re going to enable the transfer of know-how and technology between both parties. We have the local know-how, but they have vast expertise in renewables, in addition to strong and large technical teams. And after all, partnerships are key to success.
GIG: Greece’s renewable energy space is attracting the interest of leading energy companies from across the globe. How, in your opinion, can international capital best contribute to Greece’s energy transition?
Mavros: The reality is there’s an abundance of capital in the world at the moment.
We’re looking for smart deals and long-term investors, through which we can jointly exploit opportunities and capitalise on longstanding and strategic players.
This was depicted during our parent company’s recent share capital increase. The bulk of the capital that was raised derived from reputable institutional investors that believe in our growth plan.
GIG: How do you think the markets have interpreted this vote of confidence?
Mavros: The results of the share capital increase are a response to the proof of concept that we’ve presented over the course of the last two years. We managed to transform the PPC group organically, while also demonstrating that PPCR can build projects of a very important scale. More importantly, perhaps, is the fact that we concluded PPCR’s first project finance transaction – ever – with the participation of the European Investment Bank. We also secured project financing for our very first corporate PPA-backed renewables project in Megalopolis. Altogether, these milestones have served to demonstrate that institutional investors support our vision to create a modern green utility and technology company.
GIG: Close to 1 GW of PV projects will be developed in Western Macedonia. What impact do you expect these projects to have at an economic and social level?
Mavros: Western Macedonia is undergoing a major transition because it’s an area where the PPC group has been present for decades, producing fossil-fuel based electricity. The company will remain there, but with a completely different profile as it moves away from lignite plants and towards mega renewable projects. As a result, climate conditions will improve drastically, jobs will be created during both the construction and operational periods, while the government is leading a large-scale plan to drive the area’s transition. This includes re-educating people with new skills, reshaping the region’s investment plan, shifting towards renewables, and providing better uses to available land for activities like tourism, technology, or alternative forms of soft investment.
GIG: Growing interest from industrial corporates to sign power purchase agreements (PPAs) is being accompanied by proposed market reforms that would facilitate the development of a market for bilateral private RES-PPAs. What opportunities do you see this creating for PPCR? How will this impact the Greek energy market?
Mavros: One of the most important issues in the renewables world – in both Greece and Europe – relates to market reforms that have triggered a shift from subvention supported schemes, through the feed-in tariff programmes of the past, to more mature schemes based on corporate PPAs. These market reforms are depicted in the target model, which is the marketplace where electricity can be independently bought and sold by producers to consumers.
And today, renewables have reached grid parity, meaning they are at least the same price as any other source of energy. And this means they can be constructed without subsidies.
The fact that the PPC group is a vertically integrated player poses an advantage to PPCR in the sense that we can sell electricity directly to our parent company. However, this is not the only customer we will have. In the future, all producers of renewable power should be able to sell electricity directly to third parties, without intermediaries. This will benefit everybody from the producer to the retailer down to end consumers. It incentivises the development of more renewables and the generation of more electricity, whereas this will be produced in a cheaper manner – in effect benefiting the entire value chain.
GIG: You have expressed an interest in expanding PPCR’s footprint into the Balkans. What is the strategy? Which countries are your considering?
Mavros: Simply based on geographic reasons, our natural expansion strategy is focused on the Balkan region, prioritising projects we can develop, or co-develop. This is further supported by the new grid interconnections that are being built that make countries like Romania and Bulgaria of particular interest for investments, as these markets are more mature and have a larger critical mass.
GIG: What drove you to take on the leadership of PPCR and what would you like to achieve during your time heading this organisation?
Mavros: Coming from a background that combines infrastructure, global finance, technology, and energy, I understand that all these areas are converging, making this the right place and the right time to create value and impact.
I believe that PPCR should be a very strong player in the market, and my ambition is to be able to successfully contribute to the transformation of the group into a green utility.
Not only will this provide cleaner, better, and cheaper power solutions to end customers, it will contribute to fighting climate change and create better conditions for the wider population.