Energy
Investment Sectors
Last Updated: 26-05-2021
-
€44 bn
Prospective investments deriving from Greece’s energy and climate plan by 2030. -
2025
Target date for closure of Greece’s lignite-fuelled power plants -
35%
Amount of energy to derive from RES by 2030 -
10GW
Est. installed RES capacity (Apr. 2020)
The Green Revolution: Powering Ahead
Billions of euros in new projects are either in the pipeline or coming online as the country phases out coal-based energy production, and embraces renewable energy sources. And investors from across the globe are taking notice.
Long considered a laggard within the EU in the fight against global warming and climate change, since December 2019 the Greek government has pushed ahead a raft of overhauls in the energy sector. In doing so, the country’s environmental priorities have transformed in leaps and bounds. With its fertile plains in the north and windswept islands of the south – and as a key player in the EU’s long-term energy strategy – Greece is developing into an important regional energy hub at the crossroads of Europe, Asia, and Africa.
The Plan
From pledging to shutter all 14 of the country’s lignite-fuelled power plants by 2025 to interconnecting the majority of Greece’s islands to the mainland grid, thus phasing out polluting autonomous diesel-powered generation units, the plan is based on decarbonising energy production, upscaling energy efficiency, while fostering the uptake of renewable energy sources.
Natural gas, meanwhile, is set to play a crucial role as a low-carbon bridge from fossil fuels to renewables. Projects like the Trans Adriatic Pipeline (TAP), the Greece-Bulgaria Interconnector (IGB), and the offshore floating LNG storage and regasification unit (FSRU) in Alexandroupolis not only contribute to the diversification of energy supply, they build energy resilience. Meanwhile, Greece’s electricity grid is being expanded to neighbouring Bulgaria, North Macedonia, and Italy. Billions of euros in projects – from pipelines and wind farms to power transmission – are transforming Greece into a regional energy hub in Southeastern Europe.
An indication of the degree of Greece’s commitment towards the green transition is reflected in its National Recovery and Resilience Plan, Greece 2.0, a blueprint for the transformation of its economic model in the post pandemic era. The plan underpins the activation of NextGenerationEU, the largest stimulus package ever financed by the European Union.
Case in point: Green investments comprise one of two twin drivers of Greece’s recovery plan, with the other being the digital transition. Of the €30.9 billion in grants and loans earmarked to Greece through the EU’s pandemic recovery package, approximately 20% of this amount has been assigned to green power projects, equivalent to some €6 billion. When private investments are factored in, the budget for clean energy projects increases to more than €10 billion.
Priorities include large scale energy efficiency programmes for homes, upgrading national building stock prioritising both energy efficiency and smart metering, the upgrade and digitalisation of the country’s electricity grids, and the creation of the necessary commercial infrastructure for electric vehicles, to name but a few.
In the meantime, the investments included in the green component of Greece 2.0 are tightly interwoven with the country’s National Energy and Climate Plan (NECP). Submitted to the EU in December 2019, it sets specific targets for 2030, a milestone date on the road to achieving climate neutrality by 2050.
Indicatively, Greece has committed to reduce greenhouse gas emissions by more than 50% by the end of the decade (compared to 2005 levels), and increase energy efficiency by 38% (compared to 2017 levels). At the same time, the country has set out to boost the share of renewable energy sources (RES) in its energy mix to up to 35% by 2030, highlighting the leading role of renewables in its new energy system.
And while these targets are deemed ambitious, the good news is they’re both realistic and feasible. According to estimates in the NECP, their achievement will require investments of more than €44 billion. For example, some €9 billion will be needed to increase RES-based electricity generation, €11 billion will be necessary for energy efficiency initiatives, while the development and digitisation of the electricity distribution network will entail investments to the tune of €3.5 billion.
Big Opportunities
The stage is thus set for an investment boom, literally. Greece plans to leverage €12.7 billion of loans from the EU’s stimulus package into over €57 billion of investment through partnerships with banks and the private sector. In addition to spurring economic growth and employment, these prospective projects pose the opportunity to radically transform Greece’s energy system.
With this transformation comes opportunity. Greece’s high solar radiation combined with an almost unlimited potential to harvest wind energy make the Mediterranean country prime real estate for RES and energy infrastructure projects – something Greece is keen to develop.
By the end of the decade, Greece will need to double its current installed RES capacity to reach its targeted 20 GW. Wind energy is set to increase from 4.1 GW by the end of 2020, according to the Hellenic Wind Energy Association, to 7 GW by 2030, while the country is targeting 7.7 GW of photovoltaic power by 2030. This is up from 3 GW of total installed capacity in 2020, according to the Hellenic Association of Photovoltaic Companies.
To put things into perspective, 1 GW of installed capacity is enough to simultaneously meet the energy demands of approximately half a million homes, or the equivalent power generated by two coal-fired power plants.
Making Strides
Fortunately, a series of regulatory and legislative changes, with more underway, are ushering in a new era for the sector. For years, the licensing of RES projects in Greece has been a cumbersome and time consuming procedure with investors waiting – on average – seven years to complete the licensing of their projects. The government has pledged to reduce this to a two-year period by the end of its term.
“In order to accelerate the pace of investments in the sector, we have opted for a simplified, transparent, and efficient licensing procedure for RES projects, removing obsolete bureaucracy that yielded severe delays in the past,” says Kostas Skrekas, Minister of Energy and Environment.
From RES-generated hydrogen through to the introduction of new technologies in the market, such as offshore wind and hybrid renewable energy plants, new technologies are considered crucial for Greece’s energy transition, says Skrekas. “We want to stimulate these investments with transparent and fair frameworks.”
In addition to ongoing efforts to simplify RES licensing procedures, Greece’s Energy Ministry is working on the rollout of two other policy overhauls: For starters, it is preparing a legal framework for the development of offshore wind parks, that will at long last unlock the huge investor interest in the sector. Secondly, it is working on a national strategy for energy storage. The intermittent nature of renewables coupled with the need to strike a balance between electricity supply and demand mean Greece’s energy system needs to be backed up by the right number and types of energy storage projects.
The wider objective, explains Alexandra Sdoukou, the Ministry’s Secretary General is “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.”
Transforming the Sector
Greece’s energy sector is rapidly evolving in a bid to attract investments and further liberalise the market. With investments worth €4.1 billion planned by 2030, the power grid operator Independent Transmission Operator (IPTO) is a key player in the achievement of Greece’s decarbonisation targets. IPTO is rolling forward a multitude of projects to connect Greece’s islands with the mainland electricity grid, while also extending the national grid across Greek borders to Bulgaria, North Macedonia, and Italy.
“Almost all Aegean islands will be connected to the mainland grid by 2030, securing affordable, stable, and sustainable electricity,” says the company’s Chairman and CEO, Manos Manousakis. In addition to ending the energy isolation of Greece’s islands, their interconnection is slated to create 3 GW of additional capacity for the development of new RES projects.
In 2016 State Grid of China (SGCC) acquired a 24% stake in IPTO for €320 million as part of Athens’ efforts to liberalise its energy sector; one of several privatisations that have taken place, while some of the biggest deals still lie ahead.
The government and state-controlled electricity company PPC are prioritizing selling off a 49% stake in HEDNO, the PPC-owned operator of the electricity distribution network. The privatisation, which is expected to be completed by the end of the year, is key for PPC’s overhaul, as the power company aims to use the proceeds from the deal to accelerate its expansion into renewables while financing an ambitious plan to expand into neighbouring Balkan countries, such as Serbia, Bulgaria and North Macedonia.
In 2019 Greece’s gas utility DEPA was divided into DEPA Commercial for its wholesale and retail activities, and DEPA infrastructure for its distribution network to end-users. The company’s participation in international pipeline projects such as IGI Poseidon, IGB and EastMed remain under state control. The submission of binding offers for DEPA Infrastructure is expected by July 15, while the privatisation of DEPA Commercial is slated to roll ahead in the second half of 2021.
In the meantime, a concession on an underground gas storage facility in Kavala, in the Northern Aegean Sea, is in the works, with two groups having passed on to the next phase of the privatisation process being led by the Hellenic Republic Asset Development Fund (HRADF).
Investing Big
From China to Italy across to Germany and the U.S., foreign companies are among those at the forefront of new energy projects, and some of them are eyeing major investments.
One example: Rokas Renewables, a subsidiary of Spain’s energy giant Iberdrola, plans to develop an additional 500 MW of RES capacity in the Greek market by 2025, with planned investments amounting to €1 billion. “Rokas Renewables maintains the third position in the Greek wind energy market in terms of installed capacity, with a solid incentive to accelerate its growth even further,” says Thanasis Tsantilas, Chairman and MD of Rokas Renewables.
Germany’s ABO Wind reportedly plans to undertake RES investments worth €650 million, over the next three years, with a combined capacity of 780 MW, while France’s Akuo Energy International has earmarked an estimated €1 billion to RES-based projects in Greece during the upcoming five years. The company has said it will independently develop 750 MW of photovoltaic projects, in addition to 284 MW in partnership with Italy’s Enel.
Meanwhile, a number of international companies are teaming up with Greece’s leading corporates. In early 2021, Greece's Terna Energy, a subsidiary of conglomerate GEK Terna, announced a collaboration with Ocean Wind, a joint venture between Portugal's EDP and France's Engie, to co-develop projects in excess of 1.5 GW by 2030, with a specific focus on floating offshore wind projects.
On the back of a collaboration agreement inked between China Energy and Greece’s Copelouzos Group in 2017, the pair have developed four wind parks in Greece, in Thrace, Trikorfo, Mani and Crete, as part of a €3 billion investment plan.
Another Chinese company that is banking on the Greek energy market is tech giant Huawei. Established in Greece since 2005, the company is now betting big on Greece’s solar and energy storage market, explains Jacky Chen, Chairman and CEO of Huawei’s South Balkans division. Pointing to Huawei’s recent agreement with Greece-based conglomerate MYTILINEOS group, the duo have strengthened their collaboration on the development of PV parks. Huawei will now supply string invertors for Mytilineos’ portfolio of PV plants in the UK, Uzbekistan, Spain, and Cyprus, in addition to their ongoing collaboration at home in Greece. Chen also sees opportunities for the company in areas like Smart PV and Electric Vehicle Charging Infrastructure.
EcoMobility
Indeed, e-mobility is another pillar of Greece’s climate-neutral strategy. The country’s first electromobility law was passed in 2020, and is now in full play, combined with a slew of incentives. “We have set a very ambitious target for one out of every three new cars to be electric by 2030,” explains Sdoukou. Bearing in mind that by the end of 2020 Greece had less that 1,000 electric cars and no more than 100 charging stations, the challenges are significant.
The vision, however, goes beyond the environmental benefits and is focused on the creation of a new industry. Boosting green transportation is a priority. Yet, equally important is the attraction of investments related to the e-mobility value chain, from charging points to batteries across EV components. “We see a niche market in e-mobility,” says Sdoukou, “and we are expecting a significant amount of investments.”
International groups like Germany’s Volkswagen and France’s Citroen have taken notice, having partnered with the Greek government on the development of Green island projects in Astypalaia and Halki, respectively. Through the replacement of conventional vehicles with electric ones, the implementation of mobility on demand, and RES-based electricity production, the islands will become carbon neutral while also becoming centres of innovation.
From the phase-out of lignite-based energy production and the doubling of installed RES capacity across to the development of new electricity and gas interconnections, billions of euros in energy projects are pushing Greece towards an energy revolution. The Greek government is inviting the international investor community to participate, signalling its commitment to do more than its share in addressing the green challenge. In doing so, Greece is creating a paradigm shift in its energy system. If there ever was time to invest in Greece’s energy sector, it is now.
