Greece''s energy storage market is hot with a number of new policies paving the way
Greece has launched a new subsidy program to encourage more households and farmers to install solar projects and small storage systems. The €200 million ($215.3 million) scheme is part of the country’s post-pandemic recovery plan and will cover between 20% to 65% of PV system costs, depending on the subsidy pot. With this program, Greek households and farmers can apply for public pandemic recovery funds to cover the purchase and installation of small PV arrays and energy storage systems starting from April.
This scheme has been created to ensure that more Greek families have access to renewable energy and to boost their living standards. Additionally, the Greek government wants to reduce the country’s carbon footprint and promote sustainability. This initiative will encourage people to reduce their reliance on non-renewable energy sources that have negative externalities, such as environmental pollution and greenhouse gas emissions.
Moreover, installing solar panels and energy storage systems is a way to save money in the long run. It can help reduce energy bills and generate income by selling excess energy back to the grid. The subsidies will make this investment more affordable and help spread the use of renewable energy across the country. By promoting the use of renewable energy, Greece is paving the way towards a more sustainable future.
Q1. Define the term negative externality.
Q2.Explain two reasons why the Greek government might want to reduce the consumption of non-renewable energy.
Q3. Analyse the impact of the subsidy discussed in the article on the market for solar systems in Greece.
Q4. Discuss whether the government subsiding solar projects is an effective use of public finances.
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The European Commission has approved a €1 billion (US$1.1 billion) state aid measure for Greece to support two solar-plus-storage projects.
Consisting of two solar PV projects co-located with storage, the first one is the Faethon Project, comprising two solar plants of 252MW of capacity each and will be integrated with molten-salt thermal storage units, along with an extra-high voltage substation. This project aims to enable electricity generation during the day with the surplus to be stored and then discharged during times of peak consumption in the evenings or at night.
The other project, the Seli Project, will have 309MW of solar PV capacity and an integrated lithium-ion battery energy storage system (BESS). This project aims to optimise electricity generation and grid stability.
The EC did not disclose the storage capacity, nor output, on either project. Construction of both projects is targeted to be completed by mid-2025.
The financial aid will be carried out via a two-way contract for difference (CfD) over a 20-year period. The strike price will be determined by a technical committee on the basis of, inter alia, a cost-benefit analysis and a risk assessment. Whereas the reference price is expected to be determined as a monthly output-weighted average of the market price of electricity in the day-ahead markets.
In case of the reference price being lower than the strike price, the beneficiaries will be entitled to receive payments equal to the difference between the two; however if the opposite happens – reference price higher than strike price – the beneficiaries will have to pay the difference to Greek authorities.
The Regulatory Authority for Energy (RAE) of Greece is currently running a separate European Union-backed solicitation for energy storage, funded by the EU Recovery and Resilience mechanism. According to reports, in February the RAE narrowed down a shortlist of 1.5GW of bids down to around 300MW from 11 projects.
A previous auction round held in August 2023 selected 411MW of winning bids across 12 projects. In a deep dive article for Energy-Storage.news, analysis group LCP Delta noted that the first round had seen more than 27GW of unsuccessful bids. Greece is targeting 8GW of storage by 2030 through its most recent National Energy and Climate Plan (NECP). Meanwhile, sources have told this site that many of the winning bids in both rounds so far came in at very low prices which made it open to question whether those developers will be able to hit good IRRs.
Additional reporting for Energy-Storage.news by Andy Colthorpe.
Greece''s energy sector has been experiencing an ongoing policy reform fever in the last two years that is now extending to energy storage, net metering and small solar farms. The reforms will boost the country''s energy transition.
Greece''s new energy policy reform is expected to benefit storage projects and speed up the licensing process for PV projects.
Image: dominickvietor/Pixabay
The Greek government has completed its wide-ranging policy framework that is expected to reshape the energy sector and also benefit energy storage projects. The bill is now headed to parliament.
Earlier this month, Greek environment and energy minister Kostas Skrekas presented the framework to cabinet ministers.
The reform includes policies that target three categories of storage projects: stand-alone energy storage; combined storage with renewable power systems; and storage projects installed by Greece''s electricity consumers.
Most crucially, storage projects installed alongside renewable energy systems that do not charge from the electricity network will be eligible to participate in the county''s renewable energy tenders.
However, combined storage and renewables systems that are able to charge using the network won''t be able to participate in the tenders.
Similar sub-categories will also be set for storage projects installed by electricity consumers (e.g net metered consumers that also install on-site batteries). Specifically, the forthcoming policy framework will differentiate between behind-the-meter and front-of-the-meter storage systems. Systems that do not inject power in the network will not need a license.
Upon approval of the bill by Greece''s parliament, the country is expected to run its first energy tenders in the beginning of next year. Greece had initially said it would run energy tenders for 700 MW of energy storage by the end of 2021, but the tenders are now expected to take place in the first quarter of 2022.
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