Greece’s energy market is undergoing significant reform characterized by a vigorous drive for further growth in renewable sources
Thursday, 10 Jan 2013
“Opportunities for UK companies exist in the areas of technology and equipment, while
British consultancy services are also highly regarded in the Greek energy market”
Energy sector in Greece
Greece’s energy market is undergoing significant reform characterised by a vigorous drive for
further growth in renewable sources (RES).
Greece is emerging as an energy hub in the region, following the deregulation in the
production, transmission, and distribution of electricity and energy supplies.
The energy sector in Greece is characterised by a high dependence on imported oil, electricity
production largely coming from domestically mined lignite, and an increasing proportion of
natural gas and renewables in the energy mix.
Business opportunities are expected to emerge in the oil and gas sector following relevant
tenders for hydrocarbon exploration and exploitation.
New export opportunities for UK companies exist in the areas of technology and equipment,
while British consultancy services are also highly regarded in the Greek energy market.
Furthermore, many local developers are interested in working with UK investment funds
which have an expertise in energy projects.
The Oil & Gas Sector
Hellenic Petroleum (HP) is the leader in the Greek oil market and recently acquired the BP
network in Greece. Other major brands are also present in the market through local partners.
SHELL also operates under the umbrella of Motor Oil, the second largest player in this
market. Greece is largely self-sufficient in the production of lighter petroleum products,
although feedstock, heating oil, and lubricants are largely imported.
The energy ministry has opened up and accelerated hydro-carbon exploration. A tender for
seismic survey rights in northern Greece, the Ionian coast and south of Crete has been
recently awarded to the Norwegian PGS. There is also a tender for granting and using
authorisations for exploration and exploitation of hydrocarbon in respect of certain acreage in
Western Greece. Based on seismic surveys carried out in these areas, the estimated reserves
are in the region of 250 million barrels. UK companies have already bid for this tender. More
tenders are to follow concerning the areas of the Ionian Sea and Southern Crete (where PGS’s
seismic surveys are taking place now), as well as opportunities connected with the oil
exploration in Cyprus and the interconnection with Greece.
We believe that there will be demand for project management, engineering consultancy, off-
shore and on-shore exploration and drilling technology, off-shore platforms, etc. (you know
more about Scottish industry capacity and expertise for that particular sector).
Gas market and LNG
A major project in the sector is the Trans Adriatic Pipeline (TAP) for natural gas. The pipeline
will start in Greece, cross Albania and the Adriatic Sea and come ashore in southern Italy,
allowing gas to flow directly from the Caspian region to European markets. In September
2012 Greece, Italy and Albania signed an intergovernmental agreement between their
governments to allow the go-ahead of TAP.
The forthcoming privatisation of DEPA (State Gas Corporation) and DESFA (Greek gas
transmission system operator) in 2013 and the deregulation of the gas market, according to the
latest decisions of the Competition Committee, will open opportunities for UK expertise in
In addition to this, there are new opportunities connected with the storage and transport of
liquefied natural gas (LNG). Three major projects for LNG terminals, reaching a total budget
of 1.2 billion Euros, have recently been announced.
The Greek government gas distribution network (DESFA) has invited international investors
to bid for the design and construction of a third liquefied natural gas storage tank at its
Revithoussa LNG terminal facility near Athens ($150 million budget) and will also upgrade
port facilities at Revithoussa so the terminal can serve LNG ships with carrying capacity of
260,000 cubic meters (current limit is 135,000 cubic meters). The upgrade is scheduled for
completion in 2015.
The Greek shipping industry is a leading LNG transportation player. Orders from independent
Greek ship owners represent the largest share of new LNG carriers under construction (29
new carriers). This fleet expansion will present increased opportunities in shipping services.
The Greek national renewable energy policy is thoroughly described in the National
Renewable Energy Action Plan (NREAP) as well as in the First Progress Report for the
deployment of RES. The national renewable energy policy is mainly regulated by
L.3851/2010. There are ambitious programmes to generate an excess for RES trading. The
crisis has cast major question marks over key projects, as has the absence of
sufficient/efficient EU infrastructure to transport power from Greece into a European grid.
Greece is beyond target to hitting 20/20/20 targets; RES in gross final consumption 2011 – 12
was 13%. However, the economic crisis is having a major impact on investment and Greece’s
ability to bring new projects on stream. Grid capacity is one of the key issues. The current
grid is unable to handle much further input from RES projects and requires approximately
€1billion of investment to be updated. The Transmission System Operator is obliged to grant
priority access (priority in merit order) to all RES power stations.
On 3 December 2012 the Ministry of Environment, Energy and Climate Change published a
bill regulating matters of the RES industry. The Bill is subject to public consultation until 14
December 2012 and is intended to introduce a number of measures which according to the
Deputy Minister of Environment, Energy and Climate Change will facilitate the conclusion of
mature projects, as well as restore trust concerning access to the grid, which is becoming
congested due to the number of inactive grid connection offers. He also noted that the
proposed regulations will rationalise the procedure for the binding acquisition of grid
capacity, as well as create conditions in which only those production licences which are likely
to be materialised will be maintained.
Small wind turbines and off-shore wind parks
The national target set for wind energy is 7.5GW in 2020. Higher feed-in tariff are set for
wind energy plants with smaller installed capacity taking into account the full economic
parameters of smaller plants. Higher feed-in tariffs are also foreseen in L.4030/2011 for
offshore wind farms.
The existing scheme for private investment support, as introduced by L.3908/2011, includes
key criteria of economic efficiency, follows a coherent regional development planning and
introduces specific application rules, and it concerns all types of business, from general
entrepreneurship, to technological advancement and regional cohesion. The funding is in the
form of a subsidy of the total investment cost and ranges from 15% to 50% depending on the
region and the size of the enterprise. Especially for RES investments, including wind energy,
the maximum subsidy is up to 40% on the initial investment.
The energy ministry has announced fast-track procedures for investments in offshore wind
park projects worth €8bn. There are 24 investment plans for projects with a total capacity
exceeding 5,700 MW, of which at least 10 projects with a budget of €8m and a capacity of
4,000 MW can start being developed with immediate effect.
Tenders have been announced for the leasing of the right to explore the geothermal potential
of four areas in Greece All are favourable for the development of geothermal fields suitable
for power generation.
Utilising the enormous capacity of sunshine, which is a comparative advantage, the
government has offered overly generous tariffs that had incentivised mass uptake. These had
now been lowered (although for existing agreements old rates are valid for 18 months).
Privatisation of state energy assets
Under a wider national privatisation programme the government is selling significant share
holdings in their gas distribution and supply network DEPA/DESFA and state oil refiner
Hellenic Petroleum. UK City-based consultants already advise the Greek Government on
privatisation issues. They are well placed to expand into business generated by energy
Latest export opportunities in the Energy sector
Latest export opportunities in Greece
Getting into the market
Supplies of products and services for major projects are purchased trough tenders; a UK
company can bid independently or in a joint venture, preferably with some Greek partners to
facilitate bureaucratic procedures and provide constant feedback from the market.
UKTI’s team can advise on case by cases basis, since they are in close contact with
government authorities and associations.
More about doing business in Greece