Power policy

Greece set a 40% target for renewables in final electricity consumption in 2020. The country reached 31% final renewable electricity consumption in 2019 and fell short of the 2020 sector-specific target, according to BloombergNEF estimates. However, the economy-wide, legally binding 2020 renewables target of 18% was achieved in 2018. For 2030, the country raised the ambition for renewable electricity, aiming for a 70% share.

Greece is in the process of expanding the policy framework to double the share of renewables in electricity generation over the next decade. An almost-total lignite phaseout by 2023 and increasing interconnection of the country’s island systems can offer growing opportunities for renewables deployment.

Greece procures renewables capacity through an auction program that awards a feed-in premium. Since the program was launched in 2018, more than 3.5 gigawatts of wind and solar projects have been awarded.

Power prices and costs

The exposure of the Greek power sector to rising carbon prices has driven the country’s wholesale power price up, and prices are volatile due to highly seasonal demand fuel price fluctuations. Full liberalization of the power market in line with the European ‘target model’ has been delayed repeatedly but was completed in November 2020. Retail prices are also high, as ratepayers subsidize higher costs on the non-interconnected island systems. Growing renewables penetration, increasing interconnection, and falling lignite generation exert downward pressure on power prices.

Power market

Onshore wind and utility-scale PV are increasingly competitive with new gas, driving growing interest in renewables development. Competition in auction rounds is heating up and continuing to push prices down. The full market liberalization also now allows developers to enter bilateral contracts directly with offtakers. One bilateral corporate power purchase agreement (PPA) has been signed in Greece as of November 2021.

The Greek power system is still dominated by Public Power Corp. (PPC), the former state monopoly that owns the country’s lignite and hydro assets. As part of Greece’s bailout deal with its European creditors, PPC was to sell off 40% of its lignite capacity, but no buyers were found and in September 2019 the prime minister announced Greece would phase out all lignite production by 2028, with all but one plant to close by 2023. A flexibility mechanism to reward ramping capacity is under discussion, and at least two new combined-cycle gas turbine plants of around 800 megawatts each are in the works to ensure security of supply as lignite – which made up a quarter of generation in 2019 – leaves the system.

The transmission system operator is working to extend the grid to the islands, which host some of the best wind and solar sites, with capacity factors for the former reaching 30% in some locations. But highly seasonal power demand on the islands means that development of these sites makes economic sense only if the power can be transported to the mainland. An interconnection between the Peloponnese mainland region and Greece’s largest island, Crete, was commissioned in May 2021. Other islands have also been selected for the development of pilot hybrid mini-grid systems.

Doing business and barriers

Greece is on the road to recovering from the retroactive subsidy cuts that destroyed the market after 2014. Still, permitting bottlenecks are keeping the market from accelerating in line with investor interest. The government is taking steps to bring the permitting process down to under 2 years. Local opposition to wind projects has also been problematic. In 2017, the 154-megawatt Kafireas wind farm was delayed for more than six months after a local environmental group challenged the validity of the project's environmental permit. Streamlining the permitting process while engaging with local interests will be a challenge as Greece aims to accelerate renewables deployment.

EV market

Electric vehicles, including plug-in hybrids, made up 3% of vehicle sales in 2020. While the share is small, this is a significant jump as EVs made up only 0.4% of sales in 2019. At the end of 2020, roughly 2,200 electric vehicles were registered in Greece.

EV policy

Greece targets 14% renewable energy in transport final energy consumption in 2030, in line with EU-wide renewables targets. This is to be achieved mainly through electrification and some biofuel blending, according to the country’s energy and climate plan. The goal is for every third newly sold vehicle to be electric by 2030.

Greece introduced a subsidy of up to 6,000 euros of the cost for electric cars and two-wheelers in 2020. Subsidies for vehicle charger installations include a 500-euro grant for individuals (approx. $570) and tax deductions available for companies. Greece has exempted electric vehicles from annual road tax since 2010. Battery electric cars are exempted from car purchase excise taxes, while plug-in hybrids receive a 50% discount.

Greece applies EU fuel economy standards. These limit average emissions across manufacturer's entire vehicle production. For passenger vehicles, these are 130 gCO2/km between 2012 and 2019, and 95 gCO2/km in 2020 and 2021. Both targets will be introduced gradually. In 2020, a manufacturer’s 5% most polluting cars are excluded, while in 2021 all vehicles sold are taken into account.

The Greek government, led by Prime Minister Kyriakos Mitsotakis, is considering the implementation of a sales ban for new combustion engine cars from 2030. The proposal was under public consultation in November and December 2021.

Buildings market

Around 40% of residential buildings in Greece used oil boilers as their primary heating technology in 2019. Heat pumps met almost 4% of space and water heat demand, up from less than 1% in 2012.

Buildings policy

Greece’s renewable energy target for heating and cooling of buildings is 42% of the sector’s final energy consumption in 2030. The relatedly unambitious 2020 target of 20% was met already in 2011, only two years after the target was set. Greece has a target of annually upgrading and/or replacing 60,000 buildings or building units with new more energy-efficient ones.

The green home grants program Exoikonomisi ran over 2007-2013, and in a second phase 2014-2020. The Exoikonomisi grant covered up to 60% of energy efficiency investment costs, up to 20,000 euros, but funding amounts depend on type of dwelling, household size and household income. The grant that can be applied specifically to the cost of a heat pump amounts to 1,500 euros. The program was suspended during 2021 but is planned to be reintroduced within a year. The next round of grants for building and heat system upgrades is to be financed through the EU recovery and resilience fund. According to the Greek recovery and resilience plan, 1.2 billion euros is to be invested in residential building energy upgrades before 2026. According to the plan, an additional 0.7 billion euros of subsidies will be made available to energy-efficiency improvements in buildings owned by companies and the public sector.

Greece does not have a national boiler scrappage scheme, but the regions of Attica and Thessaly have schemes for replacing oil boilers with gas heating. In Attica, the maximum subsidy is 65% of the investment cost up to 20,000-30,000 euros, depending on household size.

Greece has implemented the EU directive on Energy Performance of Buildings. The Greek law, which implements this high-level EU directive, states that new buildings must be buildings of almost zero energy consumption as of 2021. New buildings that house services of the public and wider public sector had to follow the standards from 2019.