Overview of the Greek clean energy market

Sustainable development, and clean energy opportunities for Israel and Greek markets

March 18-20, Athens

Overview of the Greek clean energy market

Main policy aspects concerning the ghg abatement Although per capita emissions in Greece are lower than

the EU average, emissions per unit of total primary energy supply (TPES) are the highest in Europe.

Greece's greenhouse emissions are closely related to an energy mix mainly composed of lignite and oil. Lignite in Greece produces about half of the CO2 emissions.

The main policy aspects is the decarbonization of the Greek energy system by introducing low carbon (natural gas) or non-carbon (renewable) energy sources and energy efficiency

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

kto

e

/Hydro

Wind

Biomass

Geothermal

Solar

Natural Gas

Solid fuels

Petroleum products

Primary energy supply in Greece

Source: Ministry of Development (MoD) Centre for Renewable Energy Sources (CRES)

0% 10% 20% 30% 40% 50% 60% 70%

Average EU

Luxemburg

Ireland

Portugal

Greece

Spain

Italy

Austria

Denm.

Netherl.

Belgium

Germany

United Kingdom

France

Findland

Sweden

Oil dependency in the EU

Share of oil in Primary Energy Supply

Source: Eurostat

Energy Form Total Installed Capacity

(MW)

Interconnected Mainland System

Crete Rhodes Not intercon. islands

Wind 745 537 130 15 63

Biomass 24 23.8 0,4 - -

Hydro 3125 3124 0,6 - -

Natural Gas 2523 2523 - - -

Oil 2345 750 730 234 632

Lignite 5288 5288 - - -

Total 14.051 11.568 861 249 695

Installed capacity of the Greek electricity system, 2006MW

Source: Public Power Corporation (PPC) Regulatory Authority of Energy (RAE)

Biomass0% Hydro

22%

Natural Gas18%Oil

17%

Lignite38%

Wind5%

Synthesis of the installed capacity of the Greek electricity system, 2006

0

10000

20000

30000

40000

50000

60000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

GW

h

Lignite Petroleum Natural Gas Hydro Wind Biomass

Electricity generation by fuel, Greece

Source: MoD - CRES

Technology

RES

2001 2002 2003 2004 2005 2006

Hydro (<10 MW)

60 62 69 79 89 108

Wind 270 287 371 472 491 745

PV 0,7 0,8 0,8

Biomass 22 22 22 22 25 24

Total 352 371 462 573,7 605,8 877,8

Electricity generation by RES (big hydros are not included)MW

Source: CRES- RAE

2000 2001 2002 2003 2004 2005 2006

Total RES (incl. big hydros, without

pumping)

4144 2925 3543 5866 5887 6378 7948

Total Electricity

Gross Consumptio

n

53832 56204 57504 60571 61630 63800 64285

RES share 7.7% 5.2% 6.2% 9.7% 9.6% 10% 12.4%

Share of RES in gross electricity consumption, in GreeceGWh

Source: MoD - CRES

ELECTRICITY

15,3%

PETROLEUM PR

72,0%

NATURAL GAS

0,1%

COAL

6,7%

RES

5,9%

ELECTRICITY.

21.1%

PETROLEUM PR

68,5%

N.G

2,8% COAL

2,2%

RES

5,2%

1990 2005

Final energy consumption by energy form, Greece

Source:CRES

1990

Industry

25,1%Transports

44,8%

Domestic

19,4%

Agriculture

6,5%

Tertiary

4,2%

Industry

20%

Transports

38,9%

Domestic

26,1%

Agriculture.

5,4%

Tertiary

9,5%

2005

Final energy consumption by sector in Greece

Source:CRES

70

75

80

85

90

95

100

105

1990 1991 1992 1993 1994

1997

1995 1996 1997

1998

1998 1999 2000

1999

2001 2002 2003 2004

1990

=10

0

Final Cons. Transports Households Industry

Energy Efficiency Index ODEX for Greece (source ENERDATA)

Electricity and Heat Generation

52.8%

Agriculture, Domestic

Tertiary

13.2%

Transports

21.2%

Industry

9.2%

Refineries

3.5%

Mining of Solid Fuels

0.1%

Contribution in CO2 emissions of the different activities related to the use of fossil fuels

Source:CRES

Liberalisation of Greek energy market

The liberalisation of energy market in Greece started at 19.2.2001, with Law 2773/99 that harmonised Greek legislation with Directive 96/92/EC

Regarding the liberalisation of electricity and natural gas markets significant legislative modifications took place in order to integrate EU Directives 2003/54/EC and 2003/55 EC in national legislation

National targets regarding greenhouse gas emissions

1997: Hellenic Action Plan for the Abatement of CO2 and other Greenhouse Gas Emissions (follow up of the United Nations Framework Convention on Climate Change)

1998: in the context of EU policy on climate change agreed upon by the European Council of Ministers Greece’s target is that greenhouse gas emissions by

2008 - 2012 should not exceed an increase of 25% compared to 1990 levels

EU’s global target for 2008 - 2012 is to decrease greenhouse gas emissions by 8% compared to 1990 levels

National measures adopted include:

Increasing the use of natural gas in energy supply and demand sectors.

Improvement of efficiency of lignite fired power plants Increase of Combined Heat and Power (CHP) plants

capacity (high efficiency) Aggressive investment policy concerning direct support

for renewables Intensive energy efficiency plan for the demand sector

Target for RES

The national strategic target for Greece, regarding the share of RES in total gross electricity consumption, is specified in Law No 3468/2006 (art. 27/par. 9): up to 2010 this share should reach the level of 20,1% and up to 2020, the level of 29% (currently approx. 13%)

Relevant EU Directive 2001/77/EC

Ambitious but not unattainable target

Legislative tools for RES Electricity generation through RES was substantially started

with Law 2244/94 and was continued with Law 2773/99 that sets the rules for the liberalization of the electricity market

It previews that the Hellenic Transmission System Operator (HTSO) is obliged to give priority in purchasing electrical energy produced by RES. The previously mentioned legal framework covers also the go-generation of heat and power (CHP).

In 2006, the new Law 3468/2006 affecting RES and high-efficiency CHP was introduced. The new law is very important because it simplifies and accelerates the procedures for the issuing of RES and CHP installation licenses. It provides also guaranteed feed-in tariffs for the electricity produced by those technologies.

Main issues of legislation for RES The Hellenic Transmission System Operator (HTSO) is obliged to

grant priority access (priority in load dispatching) to RES electricity-producing installations and High Efficiency CHP plants, except from hydroelectric units where priority is given to small plants up to 15 MWe1.

The HTSO is obliged to enter into a 20-year Power Purchase Agreement (PPA) for the electricity produced by the independent RES-electricity producer.

Each RES-electricity producer is subjected to a special reciprocity charge (annual fee), of 3% of the producer's electricity sales to the grid. This charge is collected by the HTSO and is given to the Local Authority, within the area of which the RES generation unit operate, for the purpose of realising local development projects.

The RES-electricity production of an independent power producer or the surplus electricity production of a RES self-producer, is sold to the HTSO at a predetermined buy-back rate, which is fixed :

…… 1This priority is given to all independent producers (independently from installed MW) and auto-producers up to 35 MW for the surplus of electrical energy that they might have and Provide to the TSO under the precondition that this surplus does not exceed 20% of their total el. generation, and up to 50.000 MWh

Electricity generation:

Price (€/MWh)

Interconnected

Not connected islands

Wind parks 73 84,6

Off-shore wind parks 90

Small hydro plants up to 15 MWe 73 84,6

PV panels of installed capacity smaller or equal than 100 kW 450 500

Solar energy from PV panels of installed capacity bigger 100 kWpeak, 400 450

Other solar technologies with installed capacity until , 5 MWe 250 270

Other solar technologies with installed capacity bigger than 5 MWe 230 250

Geothermal, biomass, biogas

73 84,6

Other RES. 73 84,6

CHP of High Efficiency 73 84,6

The above prices concern all independent producers and auto-producers up to 35 MW for the surplus of electrical energy that sell to the TSO that does not exceed 20% of their total el. generation

Flow chart of the RES licensing procedure

Target for Energy Efficiency

Concerning Energy Efficiency the European Directive 2006/32/ΕC sets in countries-members, an indicative target of 9% of energy saving for the next 9 years and also obliges the countries-members to develop Energy Efficiency Action Plans. (in Greece under completion)

Tools (legal, technical) for energy efficiency

In buildings: energy specifications and standards development, use of passive and active solar systems, appliance labeling and fuel diversification through the use of natural gas; Adoption of several EU Directives and issuing of several ministerial decisions concerning energy labeling, the awaited certification in buildings (to be completed very soon)

In industry, fuel substitution by natural gas and increase in cogeneration capacity (action plan for CHP prepared according the guidelines of EU Directive on CHP 2004/8/EC );

In transport: a series of measures has been adopted, with Law 3423/05 for the biofuels, the renewal of the fleet of old private use cars, and the improvement of the infrastructure of roads and public transports

The new EU energy policy

At 8/9 March 2007, during the European Summit the EU Council approved a global energy action plan taking into consideration the proposal of European Commission for an Energy Policy for Europe

At the centre of the new European energy policy are by 2020 three 20s and one 10 : 20% decrease of ghg emissions compared to 1990 levels, 20% increase of energy efficiency, 20% share of RES in energy mix, and 10% share of biofuels in energy mix of transports

Financial instruments and economic incentives for energy investments

During the last decade several financial-support instruments are available for RES projects (with emphasis on renewable electricity production) that provide substantial public subsidies such as incentives for private investments for the Economic Development and the Regional Convergence under the so-called “National Development Law” (Nr. 2601/98 amended and supplemented by Law Nr. 3219/2004 and its amendments Laws No. 3470/2006 and No. 3522/2006)

Development Law provisions

For investment plans under the provisions of this Law, the following types of incentives are provided:a) Capital investment subsidy consisting by state grant of up to 40% in

certain cases according to the project location and the size of corporation, for the coverage of part of expenses of investment plan

b) Subsidy of leasing consisting of the coverage from banking funds part of the leasing instalments that is contracted for the acquisition of new mechanical and other equipment.

c) Tax exemption of up to 100% or the total value of the subsided expenses of the investment plan or even the value of the leasing for the new mechanical and other equipment which are acquired.

d) Subsidy of the employment cost created by the investment plan consisting by state coverage of the wage cost for two years of the new created posts

e) Interest rate subsidy, granted by the Credit Guarantee Fund of Small and Very Small Enterprises (TEMPME) that has created 5 programs regarding short-term and/or medium-long term loans of operating or under establishment enterprises of any legal form (e.g. SA, Ltd, Individual)

Financial instruments and economic incentives for energy investments

Incentives for EE and RES investment from the Structural EU and National Funds (3rd and 4th Community Support Frameworks – Operatinal Programme for Energy, and Operational Programme for Competitiveness).

Mainly capital investment subsidies up to 50% of the total capital cost.

Fiscal incentives for RES and energy saving in the domestic sector

According to the article 2 of the Law No. 3296/2004, in the reduction of expenses from the person’s taxable income is included “Percentage 20% of the expense either for the conversion of fuel installation using oil to natural gas or for new installation of natural gas, solar thermal and PV systems”. The sum that is subtracted cannot exceed 700 €.

Thank you for the attention!

Markos DamasiotisHead of Department of Development Project StudiesCentre for Renewable Energy Sources 19th km Marathonos Ave., GR 19009 PikermiTel: +302106603325,300 Fax: +302106603301