New rules announced for 2023/2024 rounds of energy storage auctions in Greece

After the success of Greece’s first energy storage auction in July this year, the government has changed the terms ahead of the upcoming second and third ones.

Hopes are high for the upcoming second energy storage auction in Greece, scheduled to take place by the end of this year. The Ministry of Environment and Energy has changed the action rules but remains hopeful that they will not affect investors’ interests.

How the auctions work

Auctions for energy storage are designed for stand-alone battery systems and work similarly to renewable energy auctions. Specifically, a price ceiling is set above which no offer can be submitted. The lowest bids will be accepted for a total capacity of projects as close as possible to the offered capacity. After the selection, any remaining offered capacity may be turned over to the next auction as an addition.

Investors also benefit from a grant from the government to build their projects, but they have to submit a letter of guarantee to participate in the process.

Low prices in the first auction

The high competition was recorded during the first energy storage auction, as the offered quota of 400 MW was surpassed eight times over. Twelve projects were selected, with an average offer of around EUR 50,000 per MW per year.

The two lowest accepted bids – EUR 33,848 per MW per year and EUR 39,956 per MW per year – came from HELLENiQ Renewables for two of its three projects (50 MW, 25 MW and 25 MW). PPC Renewables got two projects selected (50 MW and 48 MW), while Intra S-Energy – owned by Intrakat – had three (50 MW, 25 MW and 25 MW). It also submitted the highest accepted offer, EUR 64,112 per MW per year.

Shorter deadline, smaller grants

In the new decree, the Ministry of Environment and Energy maintained the plan to offer 300 MW in each of the following two auctions. They are scheduled to be held by the end of the year and in the first quarter of 2024, respectively. The participants will bid for 10-year contracts for difference (CfDs) for stand-alone battery systems.

The price ceiling remains at EUR 115,000 per MW per year. Given significant interest in the sector, the government believes there is no reason to change it.

As the second auction needs to be concluded by the end of December, the window for submission is expected to be changed to four weeks from six when the Regulatory Authority for Waste, Energy and Water (RAAEW) publishes the official proclamation next week.

However, the most significant change is that selected investors will gain a one-off grant of EUR 100,000 per MW to build their batteries, down from EUR 200,000 per MW in July’s auction. On the other hand, the letter of guarantee is reduced from EUR 200,000 per MW to EUR 150,000 per MW.

It should also be noted that this year’s two auctions benefit from EUR 200 million from the European Union’s Recovery and Resilience Facility (RRF) and EUR 100 million from the REPowerEU plan.

Investors worry about the deadline

During the recent Renewable & Storage Forum held in Athens, energy storage companies appeared optimistic about the upcoming auctions. However, there is a strict timetable for the new projects, as they must be completed by September 2025.

“We need to acquire connection terms, update environmental studies and buy the batteries. It takes 6-9 months for their delivery. Therefore, the timetable is strict”, said Sotiris Kapellos, head of renewables for HELLENiQ Energy.

There is also the issue of whether it makes more sense to participate in the auctions or to have the battery project participate freely in the wholesale power market. A study by the University of Thessaloniki showed that income can be higher in the second case, although the auction provides greater investment stability and visibility. This is important to make the investment more bankable and acquire easier financing.