The Energy sector in Greece experiences a transitional but very interesting period. The growth of the sector has the potential to make a significant contribution to the country’s economic recovery. The liberalization and reformation of the electricity and gas markets is essential and regulatory authorities must be given the necessary power and independence to reduce the market power of dominant firms. Important changes should also be made in the field of renewable energy.
Increasing competition and reducing the role of the State in the energy sector should add efficiency and dynamism to the Greek economy. This, in turn, can generate self sustained employment and prosperity for the country.
In the electricity market fundamental changes in market structures and regulations are needed if Greece wishes to reach its ambitious energy goals. Large private companies have entered dynamically in the sector of sale and trading electricity increasing competition, driving prices down and gaining share of the electricity consumption. However the Public Power Corporation (PPC) remains the dominant player in the wholesale and retail markets and the owner of transmission and distribution assets. In order to mitigate PPC’s dominance, ensure non-discriminatory treatment for independent power producers (IPP) and provide regulatory certainty for investors in a competitive energy market, a strong and independent regulator is needed.
Natural gas is also emerging as the fuel of choice for power generation. As the electricity sector, the natural gas sector has traditionally been state controlled, but is now gaining pace. Although the State remains in control of most of the gas supply through DEPA and the gas transmission infrastructure through DESFA, new entrants can be expected to gradually reduce this dominance and bring multiple benefits to the economy and the citizens. Ensuring access to the network and the liquefied natural gas (LNG) terminal is crucial for effective competition to emerge.
Greece has a large potential for wind and solar energy and is rightly determined to fulfil this potential. To facilitate renewable energy projects and increase the use of renewable energy, the government recently improved investment conditions significantly by increasing feed-in tariffs, shortening and simplifying the licensing procedures, introducing stronger incentives for local acceptance and adopting ambitious targets. The country aims to raise the share of renewable energy in gross total final consumption to 20% by 2020, which is 2% higher than its EU obligation and almost triple the 6.9% share in 2005. Compared with the renewable energy technologies Wind Energy Greece has a significant potential and the government aims to increase it to 7.5 GW in 2020. It has also set a specific target for renewable sources to provide 40% of electricity generation by the same year (the share in 2010 was 15%) and to provide 20% of primary energy for heating and cooling in 2020. Careful planning is required to ensure a smooth integration of new renewable electricity capacity into the grid and to maintain the reliability of the electricity system as the share of variable generation increases. The point is that the government should now work to ensure that the ambitious 2020 targets will be met.
The government of Greece should act quickly and effectively. Intensify electricity market reform, ensure attractive conditions for future investments and consider further limiting market dominance of the Public Power Corporation and the Public Gas Corporation, also through privatisation. At the same time boost investments in the field of renewable energy sources exploiting the high potential of Greece, promote energy efficiency in order to save money, improve energy security and mitigate climate change. Regardless of the economic situation in Greece, these reforms are very important and can contribute to the country’s long – term development.
By Vana Mehleri
AUEB Energy & Sustainability Club