Power policy

After meeting its 2020 target of 18% renewables in final electricity consumption in 2017, Greece increased this goal to 40%. The country reached 31% final renewable electricity consumption in 2019 and fell short of the 2020 sector-specific target, according to BloombergNEF estimates. For 2030, the country raised the ambition for renewable electricity, aiming for a 70% share.

Greece is in the process of expanding the policy framework to double the share of renewables in electricity generation over the next decade. Increasing interconnection of the country’s island systems can offer growing opportunities for renewables deployment. Greece procures renewables capacity through an auction program that awards a feed-in premium. Since the program was launched in 2018, more than 3.5 gigawatts of wind and solar projects have been awarded. Under the Greek government’s plan that was approved by the European Commission in December 2021, as much as 3GW of renewables will be auctioned over 2022-2025.

Power prices and costs

The exposure of the Greek power sector to rising carbon prices and the war in Ukraine has driven the country’s wholesale power prices up. Wholesale prices are also volatile due to highly seasonal demand and fuel price fluctuations. Full liberalization of the power market in line with the European ‘target model’ has been delayed repeatedly but was completed in November 2020.

Retail prices are also at unprecedented levels due to the war in the Ukraine and the fact that ratepayers subsidize higher costs on the non-interconnected island systems. In 2022, the Greek government provided several rounds of electricity subsidies for households and small businesses. The subsidies for August 2022 and September 2022 amounted to 1.1 billion euros and 1.9 billion euros respectively, aiming to absorb at least 89% of the price increases.

In the near-term, Greece plans to tackle the rising power prices through doubling lignite production, expanding the Revithoussa liquefied natural gas (LNG) terminal and building a floating LNG terminal at Alexandroupolis. Growing renewables penetration and increasing island interconnections will also exert downward pressure on power prices.

Power market

Onshore wind and utility-scale PV are increasingly competitive with new gas, driving growing interest in renewables development. Competition in auction rounds is heating up and continuing to push prices down. The full market liberalization now allows developers to enter bilateral contracts directly with offtakers. One bilateral corporate power purchase agreement (PPA) has been signed in Greece as of November 2021.

The Greek power system is still dominated by Public Power Corp. (PPC), the former state monopoly that owns the country’s lignite and hydro assets. As part of Greece’s bailout deal with its European creditors, PPC was to sell off 40% of its lignite capacity, but no buyers were found. In September 2019, Prime Minister Kyriakos Mitsotakis announced Greece would phase out all lignite production by 2028.

However, following Russia’s invasion of Ukraine, PCC planned to increase lignite production to ensure adequate energy supply fearing potential Russian gas shortages. The response includes ramping up production in all Greece’s operating lignite plants. In addition, a new 660MW lignite power plant will start production in the fall of 2022. It was originally expected to operate on natural gas by 2025. Three new combined-cycle gas turbine plants of around 800 megawatts each are in the pipeline to ensure security of supply.

The transmission system operator is working to extend the grid to the islands, which host some of the best wind and solar sites, with capacity factors for the former reaching 30% in select locations. But highly seasonal power demand on the islands means that development of these sites makes economic sense only if the power can be transported to the mainland. An interconnection between the Peloponnese mainland region and Greece’s largest island, Crete, was commissioned in May 2021. The islands of Skiathos and northern Sporades were connected to the mainland grid in July 2022. Other islands have also been selected for the development of pilot hybrid mini-grid systems.

Doing business and barriers

Greece is on the road to recovering from the retroactive subsidy cuts that hurt the market after 2014. Permitting bottlenecks are also keeping the market from accelerating in line with investor interest. The government is taking steps to bring the permitting process down to under 2 years. Local opposition to wind projects has been consistent. In 2017, the 154-megawatt Kafireas wind farm was delayed for more than six months after a local environmental group challenged the validity of the project's environmental permit. Streamlining the permitting process while engaging with local interests will be a challenge as Greece aims to accelerate renewables deployment.

EV market

Electric vehicles (EVs), including plug-in hybrids, made up 7% of the vehicle sales in 2021. While the share is small, this is a significant jump as EVs made up only 3% of sales in 2020. At the end of 2021, roughly 7,000 electric vehicles were registered in Greece.

EV policy

Greece targets 14% renewable energy in final energy consumption in transport by 2030, in line with EU-wide renewables targets. This is to be achieved mainly through electrification and some biofuel blending, according to the country’s energy and climate plan. The goal is for 30% of the newly sold vehicles to be electric by 2030.

Greece introduced a second round of e-mobility subsidies in July 2022, increasing the maximum amount to 8,000 euros from 6,000 euros for EVs and to 3,000 euros for select two- and three-wheelers. Subsidies for vehicle charging installations include a 500-euro grant for individuals and tax deductions for companies. A “Green Taxi” EV incentive was also introduced in 2022, with a subsidy of up to 20,000 euros for the replacement of old taxis with EVs. Greece has exempted electric vehicles from annual road tax since 2010. Battery electric cars are exempted from car purchase excise taxes, while plug-in hybrids receive a 50% discount.

Greece applies EU fuel economy standards. These limit average emissions across manufacturer's entire vehicle production. For passenger vehicles, these are 130 gCO2/km between 2012 and 2019, and 95 gCO2/km in 2020 and 2021. Both targets will be introduced gradually. In 2020, a manufacturer’s most polluting cars (5%) are excluded, while in 2021 all vehicles sold are taken into account.

Greece’s National Climate Law, which was passed in the parliament in May 2022, includes a sales ban for new combustion engine cars from 2030.

Buildings market

Around 40% of residential buildings in Greece used oil boilers and 15% used natural gas as their primary heating technology in 2021. Heat pumps met almost 3% of space and water heat demand, up from less than 1% in 2012.

Buildings policy

Greece’s renewable energy target for heating and cooling of buildings is 42% of the sector’s final energy consumption in 2030. The relatively unambitious 2020 target of 20% was met in 2011, only two years after the target was set. Greece has a target of annually upgrading and/or replacing 60,000 buildings or building units with new more energy-efficient ones until 2030.

The green home grants program ‘Exoikonomisi’ ran over 2007-2013, and had a second phase over 2014-2020. The program was reintroduced in 2021, with the grants for building and heat system upgrades financed through the EU recovery and resilience fund. According to Greece’s 2021 recovery and resilience plan, 5.2 billion euros is to be invested for building renovations and energy efficiency upgrades.

Greece has implemented the EU directive on Energy Performance of Buildings. The Greek law, which implements this high-level EU directive, states that new buildings must be buildings of almost zero energy consumption as of 2021. New buildings that house services of the public and wider public sector had to follow the standards from 2019.

Greece’s National Climate Law bans the sales and installation of oil boilers in 2025. The sale of heating oil will be only allowed if it is mixed with at least 30% renewable fuels by 2030.