Energy sector in Greece

An Expert's View about Energy in Greece

Posted on: 6 Feb 2013

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). Market overview 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. Key opportunities 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. Hydro-carbon exploration 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 the sector. 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. Renewable Energy 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. Geothermal power 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. Photovoltaics 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 privatisation deals. 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
Posted: 06 February 2013

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