Determined to get ahead of the curve as the world is facing a climate emergency, Greece is shutting down its lignite-fired power plants and setting the stage for a future where much of overall energy needs will be covered with electricity from renewable sources. As a result, investors are anxious to take part in the country’s transformation toward sustainable solutions. At the same time, the reforms have a strong focus on protecting the communities that are affected by the rapid changes and on improving the quality of life.
Greece is not leaving anything to chance when it comes to cutting greenhouse gas emissions. The country is suffering from more and more devastating wildfires, the most obvious consequence of climate change in the Mediterranean. Scientists project the region is exposed to some of the worst rates of global warming.
The European Union is racing to become climate neutral by mid-century, which means it must drive net emissions down to zero. With the exception of widespread solar water heating facilities and an early expansion of household photovoltaic systems, Greece didn’t have a strong tradition in the renewable energy sector. But in the past decade it has swiftly risen to become one of the flagbearers on a global scale.
Energy is the main source of emissions, so phasing out fossil fuels is essential to mitigating climate change. Greece is in an unenviable position because of its dependence on coal, which is fueling thermal power plants in two hubs – in the Western Macedonia region in the northwest and near Megalopolis in the Peloponnese.
The coal industry is a major employer, so tens of thousands of families and small businesses are affected in the process of shutting it down. Prime Minister Kyriakos Mitsotakis and his cabinet are developing mechanisms to cushion the blow and maintain the two regions’ role as energy centers, but with massive investments in green energy.
A strong reliance on tourism is one of the other challenges, as millions more people consume energy in the summer months than out of season. Furthermore, communities on many islands depend on oil for the production of electricity. Such a system is expensive and often unreliable.
Leave no one behind
The decision makers in Athens have a daunting task not to allow anyone behind, particularly amid the current energy crisis, and to overcome both technical and administrative challenges in a complex and urgent energy makeover. Given the latest policy developments, they are betting on competitive advantages from a rapid transition.
The markets acknowledged the government’s efforts – companies are preparing massive investments in emerging sectors like sustainable mobility, energy storage and offshore wind. Here are the five main elements of Greece’s energy transformation, strongly linked to one another.
Renewable energy boom
Coal plants are being replaced with renewables, but new capacities must be much bigger. Wind and solar power plants depend on weather conditions, and so does hydropower, which means output is much less predictable than with coal and oil. On top of that, future heating, manufacturing and transportation will be switching to electricity.
Greece is rapidly changing laws and regulations to adapt to the new kind of market, ease the administrative burden and attract investors to renewable energy auctions. The result? There are more than 5,500 licensed projects with a total capacity of 95 GW!
The government is backing major projects by declaring them strategic investments. It also has a range of incentivization tools, including for energy storage, a key factor for balancing wind and solar power.
One of such endeavors is for Terna Energy’s pumped storage hydropower plant Amfilochia, a European project of common interest – PCI.
The Public Power Corp. (PPC or DEI), which was until recently majority-owned by the government, has been far from passive in the transformation of the energy sector. Its subsidiary PPC Renewables is responsible for bringing state-of-the-art green tech to coal land and beyond, partly through partnerships like the one recently signed with RWE from Germany.
The government is leaning on the National Recovery and Resilience Plan Greece 2.0 and the European Union’s other funding schemes for getting a variety of green projects on track.
Fossil fuel sector turning to green energy
PPC is one of the most important drivers of the energy transition in Greece. The company is overcoming financial difficulties despite its coal legacy.
According to the country’s draft Climate Law, the use of coal will end in 2028 at the latest. PPC is building its last lignite-fired power plant, Ptolemaida 5. According to earlier plans, it should be switched to gas already in 2025.
In the meantime, gas and oil companies in Greece are turning to renewable sources to secure a position in the low carbon energy market. In addition to solar and geothermal energy endeavors, they are participating in hydrogen projects White Dragon and Green HiPo, both declared important projects of common European interest (IPCEI).
Underwater power bridges
The Independent Power Transmission Operator (Admie or IPTO) and the Hellenic Electricity Distribution Network Operator (HEDNO or DEDDIE) have just reported a surge in investments last year and ambitious plans for grid development.
The best way forward for islands is to connect them to the mainland power grid. They need to utilize their renewable energy potential and set up battery systems to store excess electricity.
There are also projects underway to make small islands like Astypalaea energy independent with green investment including energy efficiency, digitalization and electric vehicles. The government is conducting them in cooperation with Citroën, Tesla, Volkswagen and other tech heavyweights.
Opportunities, assistance for citizens, communities
Greece is recording a surge in renewable energy projects, mostly solar power, developed by energy communities or cooperatives, in line with the EU’s approach to enable citizens to participate in the energy transition. It is particularly important for the regions still dependent on coal.
PPC plans to offer residents of such areas in Western Macedonia and the Peloponnese to buy its bonds and participate in solar power investments with attractive yields.
Municipalities across Greece are teaming up with local institutions and utilities in the development of photovoltaic projects for own consumption. Revenue from such units will also be used to help poorer households.
At the onset of the current energy crisis, the government added substantial funds for the program for subsidies for families with low incomes, which also includes free electricity from solar power plants.
The cabinet has been busy preparing the legislative framework to cover all said activities and simplify regulations. Acknowledging the dangers associated with global warming, the government established the Ministry of Climate Crisis and Civil Protection.
The proposed Climate Law, which stipulates ending the use of coal in Greece by 2028, takes the sustainable mobility vision one step further: the sale of new cars with internal combustion should be banned by 2030. Furthermore, all the new taxis and one third of rental vehicles in Athens and Thessaloniki will be required from 2025 to have zero emissions.
Another measure in the law is that new homes built from 2023 won’t be allowed to use oil burners if they have access to the gas network.