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Greece

Greece

On the starting line waiting for the gun

So good are the purchase prices and so generous the capital subsidies that Greece is overrun with project developers waving plans for hundreds of megawatt of new wind power. But until major upgrades to the national electricity network are built there is no way of getting much needed new generation to the consumer. Industry players, however, have every confidence in the government and a new energy law on the way

Events in the Greek wind power market over the next few months will determine whether Greece can meet its EU target of between 2500 and 3500 MW of renewables installed capacity by 2010. Its current total stands at 573 MW, of which 100.7 MW was added in 2005, slightly more than in previous years. On the positive side, a new law on renewable energy is set to resolve a number of longstanding issues, a long awaited program of grid enhancement is under way and projects totalling around 550 MW, fully permitted, are waiting in the pipeline.

Beyond this, more than 3100 MW has been granted initial production licences, the first stage in the approval process for new wind plant. The success rate of bringing wind plant with a production licence to completion is around 20-30%, according to government figures.

No grid capacity

The biggest single obstacle to growth is the grid, or rather, the lack of it. The regions with the highest wind potential (Evia Island, the eastern Peloponnese and eastern Macedonia and Thrace) are limited by the low capacity of the local grids. The Greek development ministry, which overseas national energy policy, estimates there is potential for another 1060 MW of wind power in these three areas alone, if the grid could take it.

After years of discussion, the Public Power Corporation (PPC), the state-owned body responsible for production, transmission and distribution of electricity in Greece, has at last started reinforcing the transmission lines. The upgrade of the south Peloponnese grid, unlocking a potential additional wind capacity of 280 MW, should be completed by the end of 2006, possibly earlier. This will be followed in 2007 by phase one of a plan to construct a new line connecting southern Evia, where an extra 530 MW of wind is waiting to be unlocked, to the mainland. Finally, in early 2008 both a new 400 kV line linking Greece and Turkey and a super-high voltage centre should be in place, allowing the absorption of an extra 350 MW of wind energy in Macedonia and Thrace.

In addition, 80 MW could be exploited on Crete, Rhodes and other Aegean islands not connected to the mainland. The capacity of these autonomous island grids to absorb wind energy is currently restricted to 30% of peak demand, though studies are under way to see if this can be raised without compromising security.

Other methods of increasing capacity on the islands are also under investigation, including connecting large scale wind plant on remote islands directly to the mainland via a dedicated submarine transmission line. Two of Greece's largest developers, the Kopelouzos Group and Terna Energy, are independently studying several such projects totalling 800 MW and 100 MW respectively. Emmanouil Maragoudakis of Terna Energy describes the approach as "offshore development, Greek style," While deep water surrounding much of Greece makes true offshore installations difficult, there is no shortage of isolated rocks and largely uninhabited islands on which to build.

Meanwhile, PPC is launching a pilot project on the Aegean island of Ikaria consisting of a pumped-storage hydropower plant combined with a 2.4 MW wind station. It is hoped such hybrid schemes can be replicated on a larger scale on islands such as Crete and Lesvos, reducing the dependence on diesel-powered generation.

The other major hurdle hampering wind development in Greece is the long and complicated project licensing procedure. Developers must first apply to the independent energy regulator RAE for a production licence, then to the regional authorities for an installation license. The final step is an operation licence issued by the utility buying the electricity.

The whole process can take up to three years, although things should speed up as the new energy law comes into effect. Part of the problem is that some regions simply cannot process applications fast enough. Meantime, many installation permits are also being contested in the high court.

Loophole

According to Panagiotis Chaviaropoulos of the Centre for Renewable Energy Sources (CRES), which promotes renewable energy, opponents of wind plant are able to exploit a loophole in the land-use planning regulations to block development. He is optimistic, however, that the loophole will be plugged in a new planning framework to be introduced by mid-2006.

Public opposition is greatest in the Peloponnese, largely over the impact on local bird populations, and in areas with high concentrations of turbines. Elsewhere, the level of public support for wind energy is generally high. The present government can take much of the credit for this, asserts Terna's Maragoudakis. "They give the impression they care very much about wind and have created a very positive atmosphere," he says. It is a sentiment shared by almost everyone in the industry.

Underlining the government's commitment to renewable energy, Deputy Minister of Development George Salagoudis points out that the renewables capacity brought into operation in the last 18 months equals half that installed during the whole decade 1994-2004. That the government hopes to sustain this rate of development is clear from the new draft law outlining the framework for renewables which is currently going through parliament.

One of the law's prime aims is to codify the existing legislation which has grown piecemeal since the first renewable energy law in 1994. It should also speed up the licensing process by simplifying the procedures and improving co-ordination between the different ministries involved. Furthermore, it specifies time limits within which authorities must respond to applications.

The law should also aim to improve the tariff structure governing hybrid stations, and offshore wind plant are mentioned for the first time, including the introduction of a feed-in tariff slightly above the onshore rate. Both CRES and the Hellenic Wind Energy Association (HWEA) believe the law is a step in the right direction. "It is the best that can be expected at this moment," comments Chaviaropoulos.

While in theory the Greek electricity market is deregulated, in practice there is still a long way to go. PPC -- owned 51.12% by the government -- produces 96% of the country's power and is the only supply company. It also controls the grid. Full deregulation might improve penetration to the islands, but lack of it is certainly not hampering development on the mainland. As Ioannis Tsipouridis, president of HWEA, notes, "There is already so much interest in wind, the market does not need more incentives." Applications for production licences total over 15,000 MW -- more than 10,000 MW greater than the country's total installed energy production.

Great winds, great price

One of the reasons for all this interest is that Greece has some of the greatest wind potential in the Mediterranean region and yet is largely underexploited. Most developers do not bother with wind speeds under 5 m/s and 7-8 m/s is the norm for most projects.

The tariff structure is also generally regarded as favourable. The feed-in tariff for renewable energy, introduced in 1999, is set at 70-90% of the retail price of electricity; the lower rate applies to small plant, usually belonging to individual farmers, selling excess capacity to the grid. For major plant the tariff is currently around EUR 84.6/MWh for installations on islands not connected to the grid and EUR 72.9/MWh elsewhere. Purchase contracts are guaranteed for ten years, with an option to renew for a further ten.

In addition, transmission operator HTSO is required to grant priority access to electricity produced from renewables. Further support is available in the form of EU and national subsidies. Under the EU Community Support Framework, wind producers can apply for a subsidy of 30% of the investment cost. Subsidies are awarded by the development ministry according to various technical and financial criteria. The national Development Law also provides grants of 30-50% for projects built in priority areas, for example regions of high unemployment.

All this translates into plenty of interest from investors. By far the biggest local developer and wind energy producer is Rokas, now owned 49.9% by Spain's Iberdrola (box). Rokas not only built the country's first privately owned wind station in 1998 but also its two largest plant to date, a 40.3 MW development at Patriarchis and 31.2 MW at Kerveros, both in Thrace. It now owns 12 plant with a total installed capacity of 192 MW, representing 33% of the Greek wind energy market. It has 56 MW under construction and, with the extra funds generated by the Iberdrola deal, aims to expand its portfolio to 600 MW by 2009.

Rokas is also looking for opportunities abroad, particularly Bulgaria, Romania and Turkey. Last July Rokas and Iberdrola signed a memorandum of understanding with Turkey's Bal├Ákesir Elektromanyetik Sanayi ve Ticaret AS to develop, build and operate 225 MW of wind throughout the country.

Second in the wind developer ranking is the Kopelouzos Group. It expects to bring over 100 MW online by 2008 to add to its current total of 70.03 MW and hopes to achieve a further 800 MW by 2010. Terna Energy is another major Greek developer-operator with a long track-record. The company has 65 MW in operation and at least another 100 MW due by the end of the year. Its target is 400-450 MW installed wind capacity up and running by 2009. Terna is also developing projects outside Greece, but declines to give details.

Foreign interest

Meanwhile, a number of foreign investors are jostling for a position in the market. In addition to its stake in Rokas, last year Iberdrola bought 56 MW of Greek wind plant from Spain's Gamesa Energía (Windpower Monthly, September 2005). Gamesa, which established a Greek subsidiary in 2000, has 42.5 MW fully permitted and at least another 700 MW at various stages of development.

Vassilis Spiliotopoulos, general manager of Gamesa Energiaki Hellas, thinks Greece can become "one of the most attractive countries for renewables investments in Europe" thanks, among other things, to its stable tariff structure, capital grants and the "strong will of Greece to attract foreign investment." Spain's fourth largest wind operator, Corporación Eólica SA (CESA), is nearing completion of a 34.8 MW plant near Patras in the Peloponnese (Windpower Monthly, June 2005).

Other major foreign companies active in Greece include the French renewables producer EDF Energies Nouvelles. In July 2005 the company set up EEN Hellas, owned 75% by EDF Energies Nouvelles and 25% by its Greek partner comprising the former wind power activities of the Ktistor construction group. EEN Hellas boasts 45.35 MW in operation and expects to launch another 66 MW by year end, while a further 445 MW are in the pipeline. In addition, EDF Energies Nouvelles, in association with local partners (primarily Greek wind energy developers RETD and Vector), is working on a portfolio of sites totalling 500 MW.

As far as turbines are concerned, market leader Vestas supplied over 80% of the megawatts installed in 2005. This bumped up its total market share to 42%, well ahead of Siemens (formerly Bonus) at 33%. Germany's Enercon and Nordex account for 11% and 5%, respectively.

The Greek EU renewables target is 20.1% of total energy production by 2010. Even though this includes large scale hydroelectric plant, meeting the target will require between 2500 and 3500 MW of installed wind capacity. Most observers agree this is feasible, given the degree of government support and the level of interest, but only if the grid and licensing problems are resolved and if the new law lives up to expectations. The signs are certainly good. "Everybody is on the starting line waiting for the gun," says Tsipouridis. Whether the race really begins in 2006 remains to be seen.

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