Potential Growth of Renewables and Corresponding Progress in Greece

By Eva Kaili, Member of the European Parliament
Winter 2014

According to the Hellenic Wind Energy Association, Greece has an estimated wind potential between 8.5 GW to 10 GW (with the existing grid planning), while the under implementation National Renewable Energy Action Plan foresees the wind power capacity to increase from 1.6 GW in 2011 to 7.5 GW in 2020 (International Energy Agency (IEA) 2011).

Greece currently imports the majority of its oil and gas requirements and security of supply is one of the key objectives of the national energy policy and one of the major geopolitical threats that the region and the EU are facing.

In addition to the above positive for RES facts, the strengths of the Greek RES market include:

  • ideal climate conditions for wind and solar energy
  • a proven and profitable track record of existing RES investments in the last 20 years
  • the successfully operating Feed-In Tariff system (long term Power Purchase Agreements)
  • substantial investment subsidies
  • the actual need and the corresponding decision and commitment of the Greek Governments to replace some of the existing old electricity production facilities that utilize lignite and oil, with clean technology and RES.

Since 2010 Greece, has significantly improved the RES related institutional framework and through the necessary laws, presidential decrees and ministerial decisions the country has effectively committed to the EU set targets and the Kyoto Protocol Agreements.

The new legislation included as an objective, to facilitate small projects and to accelerate the licensing procedure of the larger RES projects, since bureaucracy and red tape was the main problem investors used to complain about. To this end, the previous multiple environmental licensing stages were merged and renewable energy project zoning (land use) was effectively revised.

The main elements of the 2010 RES legislation improvements include:

  • Clear and ambitious targets for each renewable energy source, providing long-term clarity to investors and industry on the market volumes.
  • A significant reduction of the number of administrative steps involved in the permitting process ("a one-stop shop"), providing clarity on the administrative process.
  • Clear administrative deadlines, ensuring that developers will receive decisions after a reasonable pre-determined and fixed time.
  • A clear tariff structure, ensuring a stable return on investment, complemented by financing support.
  • A reward system targeted towards local communities, ensuring benefits to the local communities and individuals.
  • Further detailing of a spatial planning policy, ensuring clarity and non-recourse for the proposed project locations.

The Greek Energy Framework Policy follows the requirements of the "EC 20-20-20". In principle it means that Greece must achieve by year 2020: 20% reduction of carbon dioxide emissions, 20% penetration of renewables in the energy balance, 20% growth of energy-efficiency savings.

These objectives will be met, through a number of stated government policies and reforms that include, investment in RES, network and grid improvement, privatizations, energy efficiency of buildings, public transportation initiatives and upgrades, extensive institutional reform, etc.

The new institutional RES framework and the demonstrated commitment, has already proven its effectiveness even through the period of the Greek crisis and fiscal instability.

Effectively, during the last years electricity production from RES has almost doubled in share. According to the Greek authorities, a stunning 25.000 MW of renewable energy projects have acquired a production license, 1.900 MW an installation license and 2.200 MW an operation license.

Wind projects account for about 90% of the capacity of the licenses, so wind power remains the dominant form of renewable energy, with 1.5GW installed capacity, followed by solar (460MW), small hydro (206MW) and biomass (44MW). The contribution of RES in the electricity mix in 2012 reached 14% with an increase of 23% from 2011. Note that in 2008 the RES contribution was 5% plus a 4% from the old hydro plants

As a result of the improved legislation and operational framework for RES investments in the recent years, the RES industry is one of the few remaining profitable sectors of the Greek economy.

What is missing and what is needed are large scale RES projects that will have a big effect on the proposed "EC 20-20-20" targets.

Unfortunately, these large projects cannot be financed by the Greek distressed banking system or the existing Greek Energy companies or the indebted Greek state and definitely require foreign investments and specific EU financing and support tools.

A number of RES projects have been discussed and investigated in the last five years; the majority of them are wind energy production related, with a potential capacity of over 2.500 MW. Other projects include PV and solar thermal with a total project capacity of more than 500 MW.

It is important that the Greek side and the EU relevant authorities work together so that these projects and the holistic Greek policy approach will be taken in account by the EU Commission, the experts and the other relevant bodies involved in the process of designing the new EU energy strategy that is under consideration.