Greece to rely on carbon price, renewables potential in green hydrogen development

Despite early efforts to develop green hydrogen and its first regulatory framework, Greece finds itself on a steep curve.

The government has presented the first law on hydrogen and renewable gases in parliament. At the same time, refineries and other industries are working on projects that will determine green hydrogen’s cost-effectiveness.

However, a significant obstacle is the government’s unwillingness to support the new technology, either through subsidies or other financial instruments. The Ministry of Environment and Energy has specified that no upcoming technology would benefit from public funds. The goal is to maintain a low cost for the consumer during the energy transition.

According to Professor Pantelis Kapros from the National Technical University of Athens (NTUA), it means hydrogen will have to rely almost exclusively on the price of carbon. As the European Union’s European Trading System (EU ETS) is about to enter its second phase in 2026, the price of carbon allowances is projected to rise steeply.

Even so, market participants estimate that a ton of carbon dioxide equivalent would need to cost EUR 140, two times more than today, to make green hydrogen competitive against grey hydrogen, which is produced from natural gas.

Exports and power prices added to the equation

Regardless, Greece sees an opportunity to produce and export green hydrogen. The reason is its high renewables potential and production. The ever-increasing photovoltaic capacity has caused an overabundance of energy during the day. More demand is needed to balance the system and hydrogen can provide a way out.

Tsafos: We want to become a supplier

The hope is that the low renewable energy cost, combined with potential interest in shipping hydrogen abroad, will justify long-term investments.

“Our view is that as long as the market is interested, we want to become a supplier,” Deputy Minister of Environment and Energy Nikos Tsafos said at the Hydrogen & Green Gases Forum in Athens.

A potential problem is that green hydrogen plants are not expected to be viable if they only produce during the day, when renewable energy prices are usually lower. “Ten hours of operation are not enough to support producers and there are also technical issues to solve,” said Dimitris Kardomateas, head of the Center for Renewable Energy Sources and Saving (CRES).

He also pointed to the average daily wholesale power price, as it is higher in Greece than in most other European markets. It should be noted that electricity makes up about 70% of the total operating cost of electrolyzers.

Biomethane considered more mature

On the other hand, biomethane is considered much easier to develop.  The technology depends less on power prices and also faces fewer technical hurdles. “Biomethane has a clear role, especially through its ability to enter the gas network, and we want to utilize it”, said Tsafos.

Gas distribution company Enaon EDA emphasized its readiness to include biomethane in its network. Its CEO Barbara Morgante noted that a study is underway to pinpoint the various existing and planned biomethane production plants around the country, as well as their proximity to Enaon’s network.

Biomethane is usually obtained by processing biogas to get methane of the same purity as in fossil gas. The renewable fuel can also be produced from clean hydrogen and CO2.