Degree of reliance on imported energy:
Greece imports practically all the oil and gas it needs, and security of supply is one of the key objectives of the Greek energy policy. In the case of natural gas, the supply sources are already diversified, as Russian gas is imported through the Greek-Bulgarian entry point, while the Greek-Turkish entry point allows Greece to import gas from the Middle East and the Caspian region. Greece also receives LNG, mostly from Algeria on long-term contracts as well as additional volumes from the spot market.
Main sources of Energy:
Greece’s energy sector relies on fossil fuel combustion. The gross inland consumption in 2008 amounted to approximately 1282 PJ. The consumption of solid fuels and oil products accounts for 83% of total consumption, while the contribution of biomass and of the rest RES (mostly hydropower, solar and wind energy) is 2% and 2.4% respectively. Finally, the share of natural gas in gross inland consumption is more than 11% while the rest 1.6% of gross inland consumption is covered by electricity (net imports – exports). In 2008, gross inland consumption increased by approximately 44% compared to 1990, presenting a 2.1% average annual rate of increase. It should be mentioned that up to 1996 supply of natural gas was exclusively minor quantities from domestic primary production. In essence, the introduction of natural gas in the Greek energy system started in 1997 and since then its consumption has been continuously increasing. Lignite is Greece’s only significant fossil fuel resource, with reserves reaching 4.3 billion short tons. Greece has no hard coal reserves; for this reason hard coal is imported from South Africa, Russia, Venezuela and Colombia.
Despite the forefront position in terms of solar and wind energy, Greece has a comparatively low share of total renewable energy sources in TPE. Electricity from renewable sources represented 15% of total electricity generation in 2010, while the IEA average was 17.7%. The country has, however, large untapped renewable energy resources. Its plans to exploit them are laid out in the 2010 National Renewable Energy Action Plan.
All in all, 40% of primary renewable energy in Greece is used in buildings for heat generation, and around the same share goes into electricity generation. The rest is consumed in industry and agriculture.
In 2010, renewable energy sources provided 2 Mtoe or 7.5% of total primary energy supply (TPES) in Greece. Their share of TPES has been a stable 5% to 6% for the past two decades and only increased significantly in 2010. Renewable energy sources accounted for 21% of total energy production.
Extent of the network:
Greece’s electricity system comprises an interconnected mainland system and non-interconnected islands. These islands hold a large potential for renewable energy, mainly wind and solar. In the coming years, they are planned to be interconnected to the mainland grid. This would enable the decommissioning of the oil-fired power plants on the islands.
HTSO, the transmission system operator, estimates that the realisation of the current National Transmission Development Plan will enable the connection of about 8.5 GW of renewable energy capacity in the interconnected system. This is in line with the compliance scenario of the National Renewable Energy Action Plan (NREAP). However, the construction of new transmission projects faces considerable difficulties and consequent delays, mainly owing to strong public opposition.
Potential for Renewable Energy:
The average annual irradiation in Greece is very high (1,800 kWh/m2) and ~ 50% higher than Germany's. Greece holds the 6thplace among 35 countries around the globe regarding its solar index. Greece's solar energy production potential is far greater than its target set in its NREAP for 2020. The excess potential can be tapped to the benefit not only of Greece, but also of other EU member states in achieving their RES targets in a highly cost efficient way.
Wind power is driving growth in the renewables sector and represents a huge investment potential in Greece. The superb wind resources in Greece are among the most attractive in Europe, with a profile of more than 8 metres/second and/or 2,500 wind hours in many parts of the country. Capacity increased by an average of 30% annually between 1990 and 2003 and almost 30% of total capacity was installed in the period of 2003-2004.
It is estimated that today, 1,400 MW of wind farms are operating, while the target is 7,500 MW to be installed by 2020, from which 300 MW are attributed to offshore wind farms.
In Greece, the agricultural sector accounts for more than 5% of GDP, more than three times the EU average of 1.8%. Companies involved in biomass and biofuels will therefore find abundant sources of raw materials.
Greece lies in a geographic position that is favorable to geothermal resources, both high temperature and low temperature. High temperature resources, suitable for power generation coupled with heating and cooling, are found at depths of 1-2 kilometres on the Aegean islands of Milos, Santorini, and Nisyros. Other locations that are promising at depths of 2-3 kilometres are on the islands of Lesvos, Chios, and Samothraki as well as the basins of Central-Eastern Macedonia and Thrace.
Low temperature geothermal resources are found at the plains of Macedonia-Thrace and in the vicinity of each of the 56 hot springs found in Greece. These areas include Loutra-Samothrakis, Lesvos, Chios, Alexandroupolis, Serres, Thermopyles, Chalkidiki, and many others.
Potential for Energy Efficiency:
As of 2009, it was estimated that significant savings could be made by 2020 across all major final consumption sectors in Greece. Savings of 29% in the residential sector, 30% in the tertiary sector, 36% in transport and 15% in industry could be made. The Greek National Energy Efficiency Action Plan’s effectiveness is difficult to determine in the interim period, due to the continuing economic recession, but it is noted that several improvements could be made to the current framework, including outlining an overall strategy for efficiency in the public sector, as well as strengthening measures in public transport promotion and appliance labeling schemes.
As of 2011, the transport sector contributed most to final energy consumption (6710 ktoe, 35.3%), closely followed by the residential sector (5,448 ktoe, 28.7%).
The Greek electricity industry is dominated by the vertically integrated PPC, in which the Greek government holds a majority stake as well as the management. For the first half of 2010, PPC generated 78% and supplied 97.4% of the country’s electricity. These rates are continuously, but slowly, decreasing as other participants gain market power. Regarding its distribution activity, in October 2010 PPC’s board of directors decided to establish a new subsidiary company to own and manage the distribution network; this is an attempt to comply with the obligation of legal unbundling of the distribution from the incumbent.
New entrants, known as Independent Power Providers (IPPs), emerged investing in efficient generation technologies, including: a) Combined Cycle Gas Turbines
(CCGT), which incorporate a gas turbine generating electricity and upgrade the generation efficiency using the waste heat to produce steam that, in turn, feeds a steam turbine to produce additional electricity, b) Open Cycle Gas Turbines (OCGT), which are gas turbines that operate exhausting the residual heat to the atmosphere, c) Combined Heat and Power (CHP), i.e. power stations generating electricity and useful heat simultaneously, and d) Renewable Energy Resources (RES), such as wind, sunlight, geothermal heat and tidal energy.
Structure / extent of competition:
Greece participates in international trading using 400 kV interconnections with all neighbouring countries, namely Albania, FYROM, Bulgaria and Italy, while Turkey has been interconnected with Greece since September 2010. The transfer capacity of the interconnection lines is allotted to traders through auctions held once a year by the HTSO. The right to interconnector capacity can be traded. The number of trading companies being able to participate in these auctions is increasing; in June 2008 there were 17 companies participating, whereas in June 2009 the companies rose to 21. These are PPC, Heron Thermoelectric, Edison, Iberdrola, Neco, EGL Hellas, Atel Austria, Blue Aegean Energy, EDF Trading, Danske Commodities and others.
As far as supply is concerned, sixty-one (61) companies were listed in the participants register in March 2010. Gaining respectable market power in retail market is a challenge; the tariff structure allows PPC to supply electricity for domestic customers even below cost price and compensate through high prices for MW industrial and commercial users. Notwithstanding, tariff structure was revised towards a more balanced scheme in September 2010 as the new suppliers have been trying to reach industrial and commercial consumers. The 3 suppliers actively participating in the retail market are:
1) Verbund serving supermarket chains, Casino Parnitha, Praktiker, Fourlis, Alpha Bank.
2) Aegean Power serving Carrefour, Jumbo, Sprider, Ster cinemas, and
3) Elpedison, Trading serving, Eurobank, Grecotel, Viohalco.
The first milestone towards a liberalized electricity market in the European Union was Directive 96/92/EC. Its provisions established the first governing principles towards market opening, including a) the introduction of the concept of “eligible customers”, who could freely choose their supplier (at least 1/3 of the market in 2003), and b) administrative unbundling of network activities, generation, and supply. The instructions of Directive 96/92/EC have been applied in Greece with Law 2773/99 which defines the normative framework of the liberalized electricity market.
The Greek gas industry is still developing and is dominated by the State-owned national oil and gas company subsidiary, Public Gas Company of Greece (DEPA SA). Approximately 60% of the market in terms of volume was formally liberalised in 2005, with full choice for the local monopolies owned by DEPA in 2009106. The Greek gas market was fully open to competition including households by 2007.
Existence of an energy framework and programmes to promote sustainable energy:
Renewable energy policy in Greece is guided by EU requirements. The non-binding targets for 2010 for biofuels and electricity from renewable sources have been replaced by a binding target to increase the share of renewable energy in gross final energy consumption by 2020. Under Directive 2009/28/EC9, Greece must increase this share from 6.9% in 2005 to 18% in 2020. The overall target for the EU is 20% by 2020. The directive also includes a separate target for renewable sources to provide 10% of final energy in the transport sector by 2020.
The government plans to reach the 2020 renewable energy targets through a combination of measures on energy efficiency and renewable energy. Policies and measures to this end are detailed in the July 2010 National Renewable Energy Action Plan (NREAP). The plan contains three scenarios with differing results for final energy consumption, renewable energy contribution and capacity. In all scenarios, electricity provides by far the largest increase in renewable energy use.
According to the NREAP, power generation from renewable sources should more than triple from 2010 to meet the 2020 target of 40% in all electricity generation. The NREAP’s compliance scenario projects the installation of almost 7.5 GW of wind power by 2020, together with 2.2 GW of PVs, 250 MW of concentrating solar power plants, 250 MW of bioenergy installations (biogas and solid biomass), 250 MW of small hydro plants and 120 MW of geothermal energy. It also projects 350 MW of new large hydro capacity and 880 MW of pumped storage plants, resulting in a 40% share for renewable energy in electricity production. To meet the target, the government has increased feed-in tariffs and reduced the duration of licensing procedures.
The main instrument for the promotion of RES-E in Greece is a feed-in tariff. The mechanism is regulated according to law 3851/2010 article 5:
- The electrical energy produced by a producer or self-producer of electrical energy from RES or from CHP or through a Hybrid Station, where the electricity is absorbed by the system or by the network, is remunerated on a monthly basis, according to the following:
a. The pricing is done based on the price, in €/MWh, of the electrical energy absorbed by the system or by the network, including the network of non-interconnected islands.
b. For electrical energy produced by solar (photovoltaic) stations, separate prices have been specified by law No 3734/2009.
Investment Incentives Fund
RES investments (except PV) are eligible for receiving subsidy from the Investment Incentives fund (Law 3908/2011). The amount of subsidy varies according to the size of the enterprise and to the prefecture where the investment plan will be implemented. In any case the subsidy cannot exceed 50% of the qualifying cost of the investment.
The Greek policy regarding RES-H adoption relies mainly on a building obligation. Law 3851/2010 states that from January 2011 new buildings should cover 60% of their hot water consumption with solar panels. From 2019 (2014 for public buildings) new buildings should cover their whole energy consumption (both electricity and heat) with RES. Such obligation does not apply for existing buildings; the law only fixes minimal requirements for energy efficiency.
The Greek government also supports the RES-H&C market with investment subsidies. The investment law (3908/2011) foresees capital incentives, as those foreseen for RES-E, also for RES-H, even though the high value requirement for investment could limit its impact.
For the production of heating/cooling, law L3522/2006 was passed in 2006 and is still in effect. According to this law small domestic RES systems are eligible for a 20% tax deduction capped at € 700 per system.
The transport of electricity generated from all renewable energy sources is given priority in the interconnected system and on non-interconnected islands. As far as hydro-electric systems are concerned, priority is only given to systems whose capacity does not exceed 15 MWe.
Current energy debates or legislation:
Due to the debt crisis, the feed-in tariff rates were reduced by 40% for solar projects across the country. Currently, the government plans further cuts and is in talks with Greek PV associations and the banks to conclude a so-called 'new deal' among all parties that solves the RES fund deficit and protects the investments of the solar PV producers and the banks that loaned to them. Solar PV associations have repeated they cannot accept any further cuts to their income and that many of them barely survive as it is.
In October 2013, the Greek Parliament's commerce committee voted through a new renewable energy system (RES) bill, which added an extra fee to solar photovoltaic power producers. The new bill also brought into force net metering. According to these measures, energy-intensive industries would be offered the opportunity to sign contracts with the Greek Independent Power Transmission Operator (ADMIE) agreeing to reduce, or even totally cut, their electricity consumption during peak times in exchange for a discount in their electricity bills, which could reach up to 18% of their initial energy costs. All power producers (whether fossil fuels or renewables) would pay a fee based on their income and a calculation that takes into account the effect of each power generator to the security of the electricity supply.
Renewable power associations have been up in arms about this new ruling. They argue that conventional power producers will pass this new expense on to the consumers by simply increasing the price at which they sell their power in the wholesale electricity market. On the contrary, RES producers, they claim, have no means to do so since their income is solely based on fixed FITs and do not participate in the spot market. Thus, RES associations argue PV and wind power producers will have to pay the new fee exclusively from their own budget.
Major energy studies:
Greece is member of the EnR, which is a voluntary network of European energy agencies which aims at promoting sustainable energy good and best practice. EnR also strengthens cooperation between members and other key European actors on all sustainable energy issues (energy efficiency, sustainable transport and renewable energy).
Role of government:
Ministry of Environment, Energy and Climate Change (MEECC)
MEECC was formed in autumn 2009 by merging several functions of the former Ministries for Development and the Environment. MEECC is the central institution in climate and energy policy making in Greece. Within the Ministry, the General Directorate for Energy is responsible for energy policy and the publication of energy statistics. It is also responsible for the development of renewable energy and energy efficiency policy and oversees the Centre for Renewable Energy Sources (CRES). MEECC is also in charge of:
- implementing the provisions of the Kyoto Protocol;
- formulating and monitoring the National Programme for achieving national targets;
- set under the Kyoto Protocol.
MEECC is also responsible for the implementation of the EU-ETS in Greece. In practice, this work is done by the Emissions Trading Office within the ministry’s Directorate General for the Environment. This office is also the designated National Authority for the Clean Development Mechanism (CDM) and the designated focal point for Joint Implementation (JI) projects. The National Registry is operated by the National Centre for Environment and Sustainable Development, an institute supervised by MEECC. The coordination of all competent authorities is assigned to a seven-member inter-ministerial committee.
Ministry of Infrastructure, Transport and Networks
The Ministry of Infrastructure, Transport and Networks is in charge of transport policy planning and it coordinates closely with the Ministry of Environment, Energy and Climate Change.
Ministry for Finance
The Ministry for Finance is responsible for taxation and for the exercise of the majority shareholder function in Hellenic Petroleum.
Government agencies in sustainable energy:
Centre for Renewable Energy Sources (CRES)
CRES is the national centre for renewable energy sources, rational use of energy and energy saving, and it coordinates national policies in these areas. It also produces energy systems analysis and is active in EU funded projects. CRES is supervised by the Ministry for Environment, Energy and Climate Change.
Energy planning procedures:
The government has increased feed-in tariffs and reduced the duration of licensing procedures. The transmission system operator has also prepared a plan for developing the transmission network to accommodate a large increase in renewable energy supply.
PPC, the dominant power generator, is planning to invest billions of euros in the coming years in renewable energy. In a recent move, PPC has announced plans to construct a 200 MW solar PV park in Kozani, in western Macedonia, and an accompanying plant to produce solar panels.
Parties interested in generating renewable electricity in the Greek market must first put in an application to the national energy regulator, the Regulatory Authority for Energy (RAE). This application is also forwarded to the local authority responsible for environmental licensing, as well as the Ministry for Development. The RAE then grants an electricity production license, and following the approval of environmental terms and an offer of grid connection to the producer from the RAE, an installation license is granted by the Ministry for Development. Following this, a power purchase agreement is signed, and a contract submitted for connection to the local system or national grid.
The Ministry of Environment, Energy and Climate Change sets out the following points as key tenets of Greece’s national energy plan:
- Access to a wide variety of energy sources
- Construction of oil and natural gas pipelines within international networks
- Increased use of domestic energy sources and stocks
- Reduced dependence on certain high risk energy sources
- Development of RES installations with the granting of incentives
- Use and diffusion of clean and efficient environment friendly technologies
- Liberalization of the market, increased competitiveness and putting an end to monopolies in the electricity and natural gas sectors.
- Establishment of a healthy investment climate for businesses in the energy sector
- Energy savings for industry, transport, buildings and homes
- Establishment of national targets for the increased penetration of energy generated from RES, the reduction of greenhouse gas emissions and energy saving.
Energy regulator Date of creation:
The Regulatory Authority for Energy (RAE) was set up in 2000 as the independent regulator for all energy markets (electricity, gas and oil). It used to have primarily advisory powers, but also some direct powers over prices in natural gas retail.
Hellenic Competition Commission (HCC)
The HCC is an independent body responsible for the proper functioning of competition in all markets in Greece. It can commence inquiries into market power or market abuse ex ufficio and it acts as an advisory body to the government. HCC is overseen by the Ministry for Finance.
Degree of independence:
RAE’s chairman and two vice-presidents are appointed by the Ministerial Council, following the consent of the Greek Parliament. With the transposition of the EU third internal energy market directives in August 2011, RAE has gained more independence and powers, and it is now responsible for licensing, secondary legislation and market control and supervision.
Regulatory framework for sustainable energy:
Under Directive 2009/28/EC9, Greece must increase this share from 6.9% in 2005 to 18% in 2020. The directive was transposed into national legislation by Law 3851/2010 (Accelerating the development of renewable energy sources to deal with climate change and other regulations in topics under the authority of the Ministry of Environment, Energy and Climate Change) which came into force on 4 June 2010. The law sets a more ambitious target than the directive: 20% of gross final energy consumption, instead of 18% required by the directive. The law also sets a specific target for renewable sources to generate 40% of all electricity in 2020 and to provide 20% of primary energy for heating and cooling in 2020.
Law 3851/2010 also introduces several changes to previous legislation. It simplifies the licensing procedures, revises the feed-in tariff system and tackles barriers to renewable energy projects at local level. It also establishes specific regulations for the use of renewable energy in buildings in accordance with the Energy Performance of Buildings Regulation (ΚΕΝΑΚ).
The RAE has the following duties:
- Advisory duties: Proposing measures, issuing simple or binding opinions over secondary legislation, licensing and regulated tariffs
- Decision making: Imposition of fines, approval of implementation of the prescribed Codes that determine the normative framework of electricity market, issuance of decisions in case of complaints against parties involved –for instance in 2009 EGL issued a denunciation of the way HTSO applies the Grid and Exchange Codes, particularly in what concerns its engagement about providing information about the market operation and thereafter RAE arbitrated discussions between the parties involved.
- Dispute settlement between consumers and market participants, or between market participants and companies managing networks.
- Monitoring and reporting regarding market performance and the security of supply.
Role of government department in energy regulation:
No government department takes an active role in energy regulation.
Despite generous subsidies, the Greek RES sector encountered in the past several difficulties because of a cumbersome regulation that requires several permits from different authorities making the authorization process painfully slow. Law 3851/2010 tried to overcome these barriers streamlining the authorization process and concentrating powers on the Regulatory Agency for Energy and on the Ministry of Environment, Energy and Climate change, extending the length of the sale contract from 10 to 20 years.
Still, several barriers are in place: for example demands for subsidies according to law 3908/2011 could be filled only twice a year in April and October for all investments below EUR 50 million; installation of PV systems >10 kWp is not yet feasible on islands connected to the mainland grid. Another barrier to RES development is the prohibition to exploit “agricultural land of high productivity” (as identified by the Directorate of Agricultural Development and Local Prefectures) for the production of electricity.
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