Electricity

Greek firms start construction of 840 MW gas plant in Alexandroupolis, target Balkans for power exports

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Photo: Damco Energy

Published

January 14, 2023

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Published:

January 14, 2023

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A consortium consisting of Public Power Corp. (PPC), DEPA Commercial and Damco Energy marked the start of works on a gas-fired power plant in Alexandroupolis in Greece.

The new unit in Alexandroupolis is planned to have 840 MW in capacity. It is expected to improve conditions in Greece’s electricity system as it will balance renewables and facilitate their penetration. PPC holds 51% of the shares in the consortium, while DEPA Commercial has 29% and Copelouzos Group’s Damco Energy owns the remainder.

North Macedonian power company Elektrani na Severna Makedonija (ESM) was initially anticipated to participate in the project, based on a memorandum that it signed with Damco Energy.

It is set to become the third modern natural gas plant in Greece, after Mytilineos’s unit in Viotia, already in operation, and Motor Oil and Terna’s unit in Komotini, currently under construction. It is expected to become operational after a construction period of 32 months. Greek gas supplier DEPA Commercial is also known as DEPA Commerce.

New plant to target power exports

The new unit will be linked to the Nea Santa ultrahigh voltage substation, where the second interconnection with Bulgaria is also connected, therefore it has the option to export power to countries such as Bulgaria, North Macedonia and Serbia.

It will also be able to use fuel supplied through the terminal for liquefied natural gas (LNG) in Alexandroupolis, also under construction, and the Interconnector Greece-Bulgaria (IGB).

Mitsotakis: Greece aims to become a force for energy stability in the Balkans

Prime Minister Kyriakos Mitsotakis pointed out that Ukraine would need natural gas when the war is over and argued that the infrastructure in Alexandroupolis can potentially provide for the supply. Greece aims to become a force for energy stability in the Balkan region and beyond, he said and added that the new gas power plant would contribute to the country’s energy transition and be hydrogen-ready.

Alexandroupolis is turning into a crossroads between Asia, Europe and the Mediterranean, Minister of Environment and Energy Kostas Skrekas asserted and noted that in 2022 around 70% of Bulgaria’s natural gas was transferred through Greece.

At least three new gas plants to be required by 2030

It should be noted that the consumption of natural gas in Greece dropped 19.2% last year. The country uses the fuel primarily for electricity production, and much less for heating than the average in the European Union.

According to the latest reports and estimations by the Independent Power Transmission Operator (IPTO), at least three modern natural gas power plants may be required by the end of the decade to support the decommissioning of lignite plants, currently operated by PPC. The minimum goal would be achieved with the Alexandroupolis facility.

Older coal plants are expected to be phased out from 2025 to 2028, but the timetable will be known when the government completes the new National Energy and Climate Plan (NECP). The document is expected to be presented on January 16 by an interministerial commitee.

Based on all the above, it looks like Greece will aim for a power mix consisting of renewables, natural gas and batteries for the next couple of decades. However, there are two issues.

First, a substantial dependency on natural gas and exposure to its price fluctuations, and second, new gas power plants are expected to require a capacity mechanism in order to remain viable from a commercial standpoint because otherwise they cannot compete directly in the market. The matter has already been highlighted both by Greek bodies and experts as well as organizations such as the European Network of Transmission System Operators for Electricity (ENTSO-E). What remains to be seen is the exact nature of the capacity mechanism and its scope.

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