Ambitious, Greek photovoltaic potential blooms!

Today we want to take an in-depth look at one of the most promising solar power companies in Southern Europe - Greece. This article mentions the challenges and opportunities related to Greek photovoltaics.

Greece's energy history has been dominated by lignite power stations, driven by abundant lignite reserves. Currently, Greece has started to make a strong statement about the energy transition and has started to close some old power plants. According to industry commentators, Greece is currently one of the most promising countries for solar PV among the southern European countries, and Greece has been holding clean energy tenders since 2018/19.

Currently, Greece also presents a promising PPA market, which we discussed in our cover story on the European market. Greece is a small market of around 10.5 million inhabitants, with tourism as the backbone of its economy. Greece doesn't have much heavy industry, meaning electricity demand is relatively low. However, there are still a large number of PV project applications underway, and Greece has the highest stand-alone energy storage target in Europe.

Greece is both an opportunity and a challenge. One interesting aspect of the market is that Greece really understands the energy transition, especially in power, because Greece does have a lot of solar and wind resources.

Several gigawatts of PV applications are pending, making Greece "a very competitive market". Due to the relatively limited load in Greece and the limited grid capacity, grid operators are slow to implement grid-connected photovoltaic power generation. Still, the operator has "ambitious plans" to expand the grid, while Greece is exploring the possibility of additional grid connections with various immediate neighbours, including a controversial one with Germany.

The government has a very specific position on grid connection priority, which has also made some international companies more concerned about the long-term viability or attractiveness of large players in a market like Greece

Looking at fundamental grid issues, most signs are very positive for the future of the Greek solar market. All indicators, whether it is installed capacity, pending applications, investment or jobs, point to a peak period, according to HELAPCO, the association of Greek photovoltaic companies. While developers are disappointed that it will take months to wait to connect to the grid, for Psomas these are the "best times" so far for the Greek PV industry and "the outlook is even better".

While statistics have yet to be released, grid connection could reach 2GW this year, a "huge number" for a relatively small country like Greece.

In its EU Solar Market Outlook 2022-2026 report, Solar Power Europe noted that in 2022 the Greek market will grow by 62% from the previous year to 1.4GW, driven mainly by small ground-mounted PV projects below 500kW. Positive growth trends have emerged in both the large-scale ground and household sectors, and photovoltaics are expected to win most of the projects in the renewable energy tenders from 2022 to 2025.

SPE also expects that Greece will add 10.4GW of photovoltaic capacity between 2023 and 2026.

From "unambitious" to "ambitious"

For SPE, some progress has been made due to the simplification of the authorization process in summer 2022 and supportive messages from politicians, but the main bottleneck is grid connection.

Looking ahead, Greece has proposed "extremely ambitious" new targets in its National Energy and Climate Plan (NECP), raising its PV target from 7.7GW to 14.1GW in 2030, although only in draft form so far.

Aurora Energy Research said, "It's a big change, and I actually think, everyone agrees, that [goals] were not ambitious enough before, and now, when it comes to grid integration and investment, it's driving more things happened."

This goal conveys a message that it is the right time to invest in photovoltaics in Greece, with a clear decarbonization direction.

"As far as we're concerned, it's doable and we could even achieve a lot more than that, but obviously it's a huge increase from what we had been aiming for."

Kunze agrees that the NECP, which also sets targets for wind and energy storage, is a key policy driver.

"In the past, the solar market in Greece was largely driven by tenders and 20-year fixed tariffs. This has changed significantly, and the government has recently announced that more rounds of tenders will be held. However, so far, these tenders have not been able to cover the large-scale solar projects that are expected to be built project."

This doesn't necessarily mean that solar is in trouble, as the government has understood that solar plants can run subsidy-free simply through a PPA, and the government has started to develop a framework for this market, discussed in the cover feature on PV Tech Power .

With the general election looming, one industry commentator said there was "a lot of uncertainty in the market" as the arrival of a new energy minister could change the trajectory of the market. However, the May 2023 election is unlikely to affect the outlook for Greek PV, Psomas said.

Grid Congestion and Priority Lists

According to the SPE report, most of the medium-voltage grids used for small and medium-sized photovoltaic plants (8MW or below) are already congested, and the same situation may soon happen to the high-voltage and ultra-high voltage grids used for the largest solar projects. online.

Smaller systems are no longer receiving new applications, Psomas said, and although there are still some large-capacity projects, there are many mature projects that have obtained grid connection permits and are under construction.

For high-voltage projects, there are so many applications pending that a priority list for grid connection of such projects was issued in August 2022, leading to numerous complaints from interested parties, especially international investors.

"In these grid permits [approvals], a lot of subsidies have been given to local Greek companies, while many international investors have received little subsidies or have not been able to connect to the grid," Kunze said. This is the current Greek market for international investors. Another concern, to what extent is the market truly welcoming of foreign investment? "

For example, Rome renewables heavyweight Enel Green Power is in the final stages of selling all of its operating plants in Greece. For projects under development, it has decided to adopt a management model that retains only 50% ownership. Companies are thinking about how to deal with this market environment.

"This is a sign that international companies are positioning themselves and facing the market more cautiously," he also pointed out, believing that these problems will be resolved in the next few months.

"In order for these projects to be active as well, it seems that this grid connection priority list needs to be prioritized again." Kefalas added that in some positive signs, Greece's DSOs and TSOs have expressed their belief that the ambitious NECP targets are achievable of.

Extended grid

In order to resolve complaints about grid connection priority lists, the Greek government has drawn up a roadmap for the implementation and development of the future grid.

Psomas added, "Of course, it's not a static situation, it's dynamic. Greece is taking steps to increase grid capacity, so, it's not the end, but obviously grid connection is the most important thing for investment today question."

Both grid operator ADMIE and system operator DEDDIE are obliged to present rolling 10-year plans each year to take this situation into account and to revise their plans, which include the current strategy for extending the grid.

"I think they should be more active in this area," Psomas said. "The appetite of investors is much greater than the normal business of grid operators. Until we really find a balance point, the grid will continue to be a major business in the next three or four years." question."

Psomas also demanded that TSOs be more transparent in publishing the activity of each substation and transmission line, which they should in theory release every few months.

"They're not doing it, it's really ugly, there's a lack of transparency, so most developers just wait and don't even know when their applications are going to get reviewed."

Psomas said DSO’s current plan is for the Greek system to accommodate up to 28GW of renewable energy by 2030, a target that seems very ambitious given the current 11GW of installed renewable energy capacity. There are more than 11GW of projects already qualified for grid connection, with 25GW of pending project applications, and many more additional grid connection applications from immature, new entrants.

"We have nearly 100GW of renewable energy projects [two-thirds of which are PV projects] that have already received their first licenses, so-called product producer certificates, and half of them (nearly 50GW) have applied to be connected to the grid, so there are many People are queuing."

The prospect of brownouts and other challenges

Kunze expects that over time the market will become more complex, starting to require energy storage and new future market designs. In addition, if there is more regulation of renewable energy due to overcapacity, it may lead to energy-saving energy storage innovations during peak periods.

Kunze said more regulation of renewable energy due to excess capacity is something the industry will eventually have to confront. Because Greece is committed to the energy transition, it will take advantage of new developments faster than other markets.

Konstantinos Zygouras, CEO of Greek EPC company Sunel Group, also noted that Greece is currently facing many of the same constraints as other markets, such as COVID-19 and the conflict in Ukraine.

"We had issues with supply chains, transport, we saw price fluctuations." "Now, things have improved a bit. Of course, in most of these [Southern European] countries, one issue that still remains is the availability of skilled labor and experienced engineers. There are so many projects already built in these markets that there is a lack of industry-relevant installers and supervisors."

Recent 4GW bidding, 2/3 for photovoltaic

The current plan involves tenders for nearly 4GW of renewable energy, two-thirds of which will go to photovoltaics. The first tender is expected to be held by the end of this year, Psomas said. There is currently greater focus on stand-alone energy storage tenders as the deadline looms for "some easy funding" from the European Union to support such tenders.

Psomas believes that renewable energy tenders will come soon. There is still plenty of time to achieve the 4GW milestone in the pre-2025 time frame. He also said the September 2022 tender was undersubscribed for the first time, with some focus shifting to commercial opportunities as developers anticipated the prospect of high volumes and low prices.

Energy storage lead

Aurora Energy Research's "European Battery Market Attractiveness Report" in April this year stated: "Aurora's assessment shows that the five most attractive markets in Europe for battery energy storage are (in alphabetical order) Germany, the United Kingdom, Greece , Ireland and Italy, taking into account policy support, revenue stacking opportunities and the need for flexible low-carbon energy.

The attractiveness of Greece and Italy has been boosted by ambitious deployment targets – Greece aims to have 6GW of battery storage by 2030, the highest in Europe. "

Storage in Greece is "going very well," Psomas said. In 2022, the Greek Parliament introduced a regulatory framework for energy storage involving a tender process.

"We have a lot of applications for stand-alone energy storage, we have over 23GW of projects that have already received their first production licenses, and about 7GW of projects are in the pipeline. Standalone battery storage could add up to 30GW."

Following the European Union's acceptance of Greece's energy storage tender program, Greece aims to hold three battery storage tenders totaling 1GW this year, first in June (400MW), then in September (300MW) and finally by the end of the year 300MW.

According to the plan approved by the European Commission, a dual support plan will be provided to the winning bidder. The winning bidder will receive capital expenditure support equivalent to 200,000 euros per megawatt, and will also receive operating support for a period of 10 years. The systems will be installed by the end of 2025.

"This will be a very important start for the Greek energy storage market," Psomas said, noting that Greece currently has no installed capacity.

Standalone battery projects outside of tenders will have to survive in the free market, which Psomas believes will only be possible if capacity compensation mechanisms are in place that do not yet exist, which currently does not exist. Discussions on this mechanism are ongoing as part of discussions between the Greek Ministry of Energy and the European Commission.

In addition, the Greek Ministry of Environment and Energy has launched a new 200 million euro subsidy program for household solar-battery systems, the first to support self-consumption of battery-coupled photovoltaic systems below 10.8kW. HELAPCO expects that between now and 2024, about 30,000 household systems will be installed in Greece.

terrain and equipment

Greece's terrain is generally hilly and mountainous, with larger plains dedicated to agriculture, Kunze said. Due to the lack of flat land, most photovoltaic power plants use fixed-tilt systems. Many solar projects are being developed in an area in the north called Kozani, where there are many former lignite power stations. Therefore, the region offers an opportunity for new PV entrants to join the traditionally high-load power grid in southern Greece. However, the solar power will still be spread across the country.

The scale of projects is constantly expanding, Juwi company is developing a 200MW power station, and Baywa r.e. company is developing a 433MW system. Some Greek large-scale project companies and international project companies also have 100-200MW projects in Greece. Zygouras also pointed out that there are also plans for 500-600MW projects.

Overall, it is clear that the outlook for Greek PV is positive, but truly large capacity additions still depend on addressing grid bottlenecks.