Greece is currently undergoing major energy sector reforms, aiming to transform the operation of the energy system, foster competitive energy markets, create significant investment opportunities, reduce greenhouse gas emissions, tackle existing climate change effects and ultimately facilitate a green energy transition.

The development of the national energy and climate plan for 2030, combined with Greece’s energy privatisation plan and the impressive increase in renewable energy sources (RES) potential in its power production, is indicative of Greece’s strong position as an important participant in the European energy mix.

Although economies have buckled under the weight of covid-19 lockdowns over the past couple of years, and recently under the Ukraine energy crisis, conventional forms of energy (such as lignite and oil) are nonetheless now handing on the torch to more eco-friendly and cheaper forms, such as RES and natural gas (as a bridge fuel); this is evidenced by the increasing penetration of RES and natural gas into the Greek market. The implications of the Ukraine war, however, in conjunction with Europe’s insufficient regasification capacity, have been borne out in rapidly adopted measures for energy security and efficiency, with the aim of ultimately reducing and even replacing imports of Russian gas. Replacement will be challenging and costly, with increased imports of liquefied natural gas (LNG) taking the lead, because, in the short term, RES are not available in sufficient quantities to cope with the entire shortfall in natural gas.

Another important aspect of upcoming energy reforms is directed towards electrification and cost reduction driven by technologies such as smart grids, e-mobility and energy-efficient buildings. Major infrastructure development initiatives, such as interconnecting the Greek islands with the mainland grid system, and the establishment of the Hellenic Energy Exchange (HEnEx), are some of the landmarks of the transition into the new era that is under way in Greece’s energy landscape.

i The regulators

The Greek energy market is regulated by the Ministry of Environment and Energy (MEE) and the Regulatory Authority for Energy (RAE).

The MEE is in charge of setting the country’s energy policy and issuing secondary legislation, whereas RAE is an independent administrative authority, established on the basis of the provisions of Law 2773/1999, transposing Directive 96/92/EC on the liberalisation of the electricity market.

Although initially limited, compared with other jurisdictions, RAE’s role was enhanced notably following the implementation of the third EU Energy Package by Law 4001/2011 (and Law 4425/2016). Following this reform, RAE is designated as the competent authority responsible for the security of energy supply and the granting, modification and revocation of all producer certificates and licences (although the authority to issue producer certificates will eventually be transferred to another administrative body pursuant to Law 4685/2020) required for the undertaking of energy activities, including the production, transmission, distribution, supply and trading of electricity and natural gas. RAE’s other areas of competence include the approval of tariffs for non-competitive activities, the granting of exemptions to the third-party access regime, the certification of transmission system operators for both electricity and gas and the certification of distribution system operators for gas. When transposed into Greek law, the provisions of the EU Electricity Market Directive² will further expand RAE’s role and tasks.

Finally, RAE is entitled to conduct studies, publish reports and resolve on or propose the enactment of measures, especially with respect to the observance of competition rules. RAE cooperates closely with the Hellenic Competition Commission where this is necessary and it is accountable to the Hellenic Parliament. Its decisions and actions each year are reported in an annual report submitted to the Hellenic Parliament, the Minister for Environment and Energy, the Agency for the Cooperation of Energy and the European Commission.

ii Regulated activities

Electricity

Under the Greek electricity sector legislation, the development, construction, commissioning and operation of any type of RES power plant (e.g., wind, solar photovoltaic, hydro, biomass) is governed by numerous and extensive administrative decisions and acts. More specifically, Law 3468/2006, as in force provides for a broad procedural framework for the licensing of renewable power production units in Greece. For a RES station to be constructed and operate, the following main licences need to be issued (unless exempted by a specific law provision):

1. an electricity production licence or a producer’s certificate;
2. an approval of environmental terms (or an exemption therefrom);
3. an installation licence; and
4. an operation licence.

Several amendments to the RES licensing process are expected to follow the implementation of a draft law currently under public consultation.

Finally, for the supply and trading of electricity, a separate licence is required to be issued by RAE.

Conventional power plants (producing energy from coal, oil or natural gas) are also subject to a specific licensing process supervised by RAE.

Natural gas

Operations in the natural gas sector are heavily regulated in Greece and licences are required to own and manage an independent natural gas transmission system and carry on the activities of distribution and supply of natural gas. These licences are issued by RAE upon application by the interested party. In certain situations (e.g., if a transmission system serves a public interest, a distribution grid is subsidised by domestic or EU sources, or multiple applications are to be submitted for a particular area), a tender process may need to be launched by RAE to grant the necessary licence.

The Licensing Regulation³ covers the type and the content of applications for the grant, amendment and revocation of the following licences, which are required to conduct the relevant natural gas activity:

1. an independent natural gas system licence;
2. an independent natural gas system operator licence;
3. a natural gas distribution network licence;
4. a natural gas operation licence; and
5. a natural gas supply licence.

iii Ownership and market access restrictions

Electricity

Power supply and trading

Trading and supply licences can only be granted to persons:

1. seated in the EU or the European Economic Area;
2. seated in a Member State of the Energy Community;
3. seated in a country that is party to bilateral agreements with either the European Union or Greece; or
4. that are legal entities with a branch in Greece.

Natural gas

The National Natural Gas Transmission System (NNGTS) Users Registry Regulation⁴ and the Natural Gas Licensing Regulation⁵ allow legal entities to apply for registration with the NNGTS users registry and to be granted gas supply licence respectively, provided that they are:

1. seated in the EU or in the European Economic Area;
2. a Member State of the Energy Community;
3. a country that is party to bilateral agreements with either the EU or Greece; or
4. a legal entity with a branch in Greece.

iv Transfers of control and assignments

Electricity

According to Law 4685/2020, important changes in the shareholding structure of a licence or certificate holder, even if they result in a change of the entity designated for the funding of a project, will be subject to mere notification requirements, without triggering an obligation to amend the producer certificate or the production licence.

Natural gas

Changes in the legal form or the shareholding structure of a holder of a gas supply licence need to be notified to RAE for the purposes of amending the corresponding licence. As regards listed companies, the aforementioned requirement applies only in cases of a change of control.

Transmission system operators and distribution system operators

In compliance with the ownership unbundling rules for natural gas distribution system operators (DSOs) and gas transmission system operators (TSOs), any intended change in their shareholding structure needs to be notified and further approved by RAE, and the unbundling certification provisions of Law 4001/2011 shall apply. RAE has to be informed and grant its prior approval if:

1. a person (individual or legal entity) acquires a shareholding in a DSO or TSO;
2. the participation of an existing shareholder reaches or exceeds 20, 33 or 50 per cent;
3. the DSO or TSO becomes a subsidiary of a shareholder because of a change of a shareholding participation or change of control; or
4. there is a change in its legal form.

For listed companies, an amendment application shall be submitted in the case of a change of control within the meaning of Article 3 of the EC Merger Regulation.⁶ If the change in the corporate or shareholding structure results in a change of control that falls under the procedure of preventive control of concentrations under Article 5 of Law 3959/2011, the licensee shall also submit to RAE a copy of the decision of the Hellenic Competition Commission on the notified concentration.

Similarly, the electricity transmission system operator (ADMIE)⁷ has the obligation to notify RAE, in compliance with the applicable ownership unbundling rules, any intended change in its shareholding structure or a change of control, underpinned also by adequate reasoning for continuous compliance with a number of other obligations, including those related to the security of supply.

i Vertical integration and unbundling

Law 4001/2011, as in force, adopted the unbundling model of independent transmission operators for both the electricity and the natural gas sectors. Under the unbundling requirements, Law 4001/2011 prohibits any person (individual or legal entity) from:

1. having direct or indirect control or any other right over a producer or supplier of electricity or natural gas operating in Greece and simultaneously having such control or rights over an operator of a distribution system of electricity or natural gas, or over the distribution system itself and vice versa; or
2. appointing or being appointed as a member of the board of directors or holding another management position of the operator and simultaneously having direct or indirect control or any other right over a company acting as a producer or supplier of electricity or natural gas in the Greek territory.

Electricity

Before the implementation of unbundling rules, PPC SA (PPC), the leading power generation and supply company in Greece, acted as a vertically integrated undertaking. Following a full ownership unbundling, PPC has fully divested its interest in the independent power transmission operator (IPTO), which was initially a PPC wholly owned subsidiary, following a divestment plan driven by both the Third EU Energy Package and the provisions of the restructuring and privatisations plan. IPTO is currently owned partly (51 per cent) by the Greek state (directly and through DES ADMIE SA), and partly by private investors (49 per cent), including the Chinese State Grid. With regard to the distribution network, it is currently operated by the Hellenic electricity distribution network operator (HEDNO), pursuant to RAE Decision No. 83/2014. HEDNO was established in 2012 following the spin-off of the distribution segment from PPC to a wholly owned subsidiary, as a means to achieve the legal and functional unbundling of the electricity distribution network operation activities from the other activities of PPC’s vertically integrated undertaking. PPC commenced the sale process of 49 per cent of its shares in HEDNO in December 2020. PPC initially retained ownership of the distribution network, but this was transferred to HEDNO in 2021. Spear WTE Investments Sarl, a member of the Macquarie Infrastructure and Real Assets group, was declared preferred bidder with a consideration of €2,116 million, including pro rata net debt of €804 million. The transaction was completed in February 2022.

Natural gas

In implementing the EU Natural Gas Directive,⁸ Law 4001/2011 has adopted full ownership unbundling of transmission system operators such as DESFA SA, the national transmission system owner and operator. The market for gas transmission includes transmission within the NNGTS. It is, therefore, distinguished from the market of natural gas transmission in independent TSOs (INGS). In this context, INGS operators (such as the Trans Adriatic Pipeline) may be exempted from ownership unbundling and third-party access obligations as well as the regulation of tariffs for transmission activities. Greek law recently expanded unbundling obligations to DSOs of natural gas, opting for an unbundling regime in the distribution sector in Greece that is even stricter than the requirements under the Natural Gas Directive.

ii Transmission/transportation and distribution access

Greek law ensures full access on a non-discriminatory basis to the transmission and distribution systems in both the electricity and the natural gas sectors.

Electricity

The transmission system and distribution network, often referred to as the ‘interconnected system’, is spread over the mainland of Greece. The Ionian islands, along with certain Aegean islands, are also included in the interconnected system, to which they are connected through submarine cables. The electricity system of a significant number of Hellenic islands is still not connected to the interconnected system and comprise a separate network called the non-interconnected islands. Following the recent completion of the connection of specific Cyclades islands to the interconnected system by IPTO, the electrical systems of Paros, Syros and Mykonos were interconnected. The majority of the Aegean islands (such as Crete, the rest of the Cyclades islands and the Dodecanese islands) will also become part of the interconnected system within the period 2021–2030. This will start with the interconnection of Crete with the Peloponnese (the smaller interconnection – Phase I), which is already electrified, and will be followed by the interconnection of Crete with Attica (the major interconnection in terms of commercial operation – Phase II), expected to be completed by 2023 according to IPTO’s expansion plan.

The distribution network is currently owned and operated by HEDNO, which is majority owned by PPC (which was granted an exclusive ownership licence for the network). HEDNO is responsible for the development, operation and maintenance of the distribution network, ensuring at the same time the most economical, transparent, immediate and impartial access to the distribution network for all users (consumers, producers and suppliers) to engage in their respective activities. The non-interconnected islands network is also owned and operated by HEDNO, acting as the operator of this network. The management of the non-interconnected islands network includes, inter alia, the operation of the local electricity distribution networks and the operation of the electricity markets in these islands.

Third-party access to the transmission and distribution systems may be granted to:

1. licensed generators and suppliers or traders;
2. those exempted from the obligation to hold licences for generation and supply or trade; and
3. eligible customers.

The terms and conditions for the provision of transmission services and access to the transmission grid are regulated by the applicable grid code and the electricity market rulebooks (i.e., the Day-Ahead and Intra-Day Markets Trading Rulebook, the Balancing Market Rulebook, and the Derivatives Market Rulebook⁹), which are intended to ensure, inter alia, the non-discriminatory and objective use of the system and the operation of the wholesale power market.

Natural gas

The national transmission system is owned and operated by DESFA SA. Gas transmission is performed by DESFA through the NNGTS via extra-high and high-pressure pipelines, whereas distribution is performed by DSOs, distributing natural gas at a lower pressure to final customers connected to the DSO distribution network through middle and low-pressure pipelines. Law 4602/2019 provides for the division of DEPA commercial and infrastructure activities. Subsequently, based on Law 4643/2019, amending Law 4602/2019, DEPA was divided into three separate legal entities: DEPA Infrastructure SA, comprising all the distribution gas activities of DEPA; DEPA Commercial SA, where all DEPA’s gas-related activities (both wholesale and supply) were transferred; and DEPA International SA, comprising all the international infrastructure projects in which DEPA participates. The same Law provides for the full privatisation of DEPA Commercial SA and DEPA Infrastructure SA but not DEPA International SA. In September 2021, Italgas was declared the preferred bidder for the acquisition of DEPA Infrastructure SA, following the privatisation processes initiated by the Hellenic Republic Asset Development Fund.

DESFA is responsible for granting access to third parties, managing, upgrading and balancing the transmission system as well as providing reserves. The above activities are conducted in accordance with the provisions of the Natural Gas Transmission System Code. The use of the system (through reserving capacity thereto) is subject to entering into the standard framework agreement for transmission and the standard-use LNG facility agreement. Entering into the relevant agreements is conditional upon registration with the National Natural Gas Transmission System Users Register, which is kept by RAE. NNGTS users are classified as natural gas suppliers, eligible customers or third parties with sufficient financial solvency and technical adequacy.

iii Rates

Electricity

After a long period of regulated prices, electricity supply tariffs to customers were fully liberalised and are freely set by suppliers. According to the tariff-setting principles, set out under the Electricity Supply Code,¹⁰ suppliers are obliged to adopt specific basic principles during pricing and tariff setting to ensure fair competition in the electricity market and protect the interests of consumers. For this purpose, the tariffs set must reflect the actual cost of electricity supply, avoid discrimination between customers of the same category and characteristics, not distort competition, and be clear and transparent towards consumers.

Natural gas

Natural gas transmission and LNG terminal access and use tariffs are determined annually in an RAE decision based on a tariff list prepared by DESFA. Tariffs for access to the natural gas distribution networks (currently operated by the subsidiaries of DEPA Infrastructure SA) are determined by using the methodology defined in the Natural Gas Distribution Tariff Regulation, implemented by RAE Decision No. 1434/2020 (Tariff Regulation) and the tariffs for use issued for each EDA. In particular, RAE is the competent authority for approving the methodology for calculating the distribution tariffs, the level of the tariffs applied annually by DSOs, the weighted average cost of capital, the regulatory asset base, and all capital and operational expenditures incurred by the distribution system operators. Furthermore, RAE is the competent authority for approving the terms and conditions for providing to distribution users third-party access to distribution networks and for approving distribution network development plans. Third-party access charges to INGS LNG facilities are predetermined by the relevant independent TSO and reflected in the terminal usage agreements entered into with terminal users.

iv Security and technology restrictions

Law 4577/2018, which transposed Directive 2016/1148/EU into Greek law, imposes important obligations for system and network security on businesses operating in, among others, the fields of energy, water and digital infrastructure (Cybersecurity Law). The framework was further supplemented by the Ministerial Decision 1027/2019, specifying the implementation of procedures stipulated in the Cybersecurity Law. A new Cybersecurity Authority has been established, which is vested with, mainly supervisory, powers, responsibility for assessing businesses’ compliance with the Cybersecurity Law and, to the extent required, imposing sanctions. A number of obligations have been imposed on businesses falling within the ambit of the Cybersecurity Law as regards the security of their systems, including the adoption of required organisational measures for the security of their networks, the implementation of preventive measures to address any security risks, as well as several notification obligations to the Cybersecurity Authority of any incidents that could have an impact on their business continuity. In general, there is a wide range of laws and legislative acts safeguarding the security of systems, such as those relating to data protection, e-privacy, laws on electronic communications and digital governance.

i Development of energy markets

Electricity

A significant milestone was reached on 1 November 2020, following Greece’s transition to the European Target Model for the operation of its wholesale electricity market (with the financial energy market already launched in March 2020), replacing the pre-existing mandatory pool system. Greece’s Target Model comprises the following:

1. the day-ahead market (DAM): participants submit trading (buy and sell) orders with an obligation of a next day physical delivery, and also an obligation to declare energy quantities resulting from trades carried out within HEnEx’s financial energy market or from over-the-counter energy financial instruments (within the meaning of Regulation (EU) 1227/2011, and for which there is a physical delivery possibility or obligation);
2. the intraday market (IDM): participants submit trading (buy and sell) orders with an obligation of physical delivery, so that participants can balance their positions after DAM closure (i.e., reduce their imbalances and financial exposure, enabling them to adjust their initial day-ahead planning);
3. the balancing market (BM): this market allows for real-time delivery with 15-minute dispatch and settlement, to balance the system closer to real time. It includes the balancing capacity market, the balancing energy market and the imbalances settlement. The imbalances settlement takes place post-real time and aims at the compensation of the energy arising from any imbalances of the participants in the BM. The BM is being implemented in two stages. During the first stage, the BM is limited solely to Greece, with cross-border balancing to follow during the second stage of implementation; and
4. the financial energy market: this market deals with the purchase of capacity, either for physical delivery or as a derivative financial product through standardised future contracts. It is designed to create a hedging position and provide risk mitigation by enabling market participants to lock prices and supply volumes, thus limiting their exposure to more volatile spot markets (i.e., the DAM and the IDM).

Natural gas

Pursuant to Article 19 of Law 4425/2016, as in force, HEnEx is also responsible for organising and operating the natural gas markets. The natural gas trading platform, launched on 21 March 2022, operates in accordance with the EU BAL Network Code,¹¹ the REMIT Regulation¹² and the Rulebook for the Natural Gas Trading Platform,¹³ and aims to determine the price on the basis of the demand and supply of wholesale natural gas in Greece.

Participants

Participants in the natural gas trading platform may be transmission users, as well as DESFA, provided that they operate in their capacity as ‘participants’. Transactions through the natural gas trading platform are anonymous and the quantities are automatically notified to DESFA, and the clearing process is performed by the EnEx Clearing House (EnExClear) (a wholly owned subsidiary of HEnEx).

To conclude a transaction, each participant must indicate through the buy or sell order placed with the natural gas trading platform the clearing member representing it, and that clearing member is liable to EnExClear for the clearing process. Following conclusion of the transaction, the clearing member automatically substitutes for the participant and is responsible towards EnExClear for the completion of the transaction.

The natural gas trading platform incorporates volatility control mechanisms and other additional functions for market protection purposes.

ii Energy market rules and regulation

Electricity

Following the implementation of the EU Target Model, the sale, purchase and, generally, trading of energy is conducted through HEnEx, which is also appointed as the nominated energy market operator for the Greek bidding zone, responsible for matching orders from the DAM and IDM and allocating the available cross-zonal capacities.

The market clearing price (MCP), namely the price at which the DAM is cleared, is determined through HEnEx. Producers injecting energy into the interconnected system are remunerated on a daily basis (either directly or indirectly through RES aggregators) by EnExClear (the payment clearing entity for the DAM, IDM and BM, through the direct or general clearing members) on the basis of the MCP, and the same MCP is charged to those requesting energy from the interconnected system. HEnEx deals with the operation of the wholesale market, DAM and IDM, whereas IPTO has exclusive responsibility for the BM and takes any actions necessary to ensure the security and stability of the system.

The energy markets operate in accordance with the applicable rulebooks (i.e., the Financial Energy Market Rulebook,¹⁴ the Day-Ahead and Intraday Markets Trading Rulebook¹⁵ and the Balancing Market Rulebook¹⁶) and clearing is performed by EnExClear according to the applicable clearing rulebooks (i.e., the Clearing Rulebook for Transactions on Day-Ahead and Intraday Markets¹⁷ and the Clearing Rulebook for Positions on Balancing Market as amended and in force¹⁸). Clearing of transactions within the financial energy market is the responsibility of ATHEXClear, a member company of the Hellenic Exchange Group, in accordance with the Rulebook for Clearing Derivatives Transactions¹⁹ as amended and in force.

Natural gas

In principle, any activity of sale, purchase, import or export of natural gas is not subject to any licensing requirement and thus is freely carried out. A supply licence is only required in the case of supply of natural gas to end users.

iii Contracts for sale of energy

A RES project can undertake the following:

1. A RES project can benefit from the fixed remuneration mechanism under the previous feed-in tariff support scheme, based on a standardised power purchase agreement with the Operator for Renewable Energy Sources and Guarantees of Origin SA (DAPEEP); subject to limited exceptions, this option is no longer available for new projects.
2. A RES project can participate in RAE auctions and enter into an operating aid agreement (effectively a contract for differences) with DAPEEP while receiving the market price through its participation in the energy markets of HEnEx (either directly or through a RES aggregator).
3. A RES project can participate in the energy markets of HEnEx (either directly or through a RES aggregator) or enter into a bilateral contract (corporate power purchase agreements (PPAs)), or both, receiving only the relevant market price or the agreed corporate PPA price or a combination of the two.

Entering into a corporate PPA, however, does not come without certain limitations. RAE Decision No. 1014/2021 reassessed the pre-existing thresholds set for suppliers wishing to enter into bilateral contracts with physical delivery (introducing a maximum of 20 per cent for suppliers with a retail market share exceeding a 40 per cent threshold). This percentage limitation is effective until 31 December 2022. RAE will reassess the percentages for 2023, taking into consideration the market data collected up to that point.

Natural gas

In principle, pursuant to Article 81 of Law 4001/2011, any activity of sale, purchase, import or export of natural gas can be freely carried out. In particular, the trading of natural gas takes place between suppliers and their customers through bilateral contracts. A gas sale and purchase agreement is a long-term contract negotiated bilaterally between a seller and a buyer for the sale and purchase of natural gas. Such contracts include provisions relating to the mitigation of supply and delivery risks, they address the parties’ long-term obligations and describe the treatment of changes that may occur throughout the term of the contract.

iv Market developments

The phase-out of all lignite-fired power plants (by a deadline originally set for 2028 and now possibly brought forward to 2025), with a view to doubling the contribution of renewable sources to Greece’s energy mix over the next decade and the turn to a green energy mix, is a key priority for the Greek government. As part of this transition, the Hellenic Republic has promoted new investments in the regions of Western Macedonia and Central Peloponnese, where the country’s lignite power-generation is located.

Law 4759/2020, as amended by Law 4872/2021, contains provisions relating to the urban and spatial planning framework, focusing, among other things, on the transition to a new post-lignite era (the Framework Law). The Framework Law aims to set out a sustainable and long-term plan for the future of the lignite regions and the basis for the provision of sufficient funding for its implementation. Regarding the financing of the transition, allocation criteria of the resources of the European Just Transition Fund among Member States will be finalised. Greece has claimed significant funds from the EU’s Just Transition mechanism, which was set up to facilitate EU Member States’ green transition from fossil fuels and also to provide financial support. PPC, in its capacity as owner of the lignite stations and mines of Western Macedonia and the central Peloponnese, is aiming for the restoration of these areas and the further installation of RES stations.

Furthermore, a series of regulatory and legislative changes touching upon the issue of connection offers, and the installation and operation licences required for RES projects, are expected to be introduced in 2022. This new set of rules aims to further expedite the licensing procedure for the issuance of installation and operation licences, opting for the simplified, transparent and efficient licensing of RES projects.

According to Greek government officials, more legislative changes are under way, focusing mainly on the implementation of new policies relating to RES-generated hydrogen, the introduction of new technologies in the market, such as offshore wind and hybrid renewable energy plants, and the implementation of a reform package targeting energy storage, in transposing the EU Electricity Market Directive. The long-awaited regulatory framework for RES licensing, energy storage and pilot floating photovoltaics (with a capacity of 0.5MW to 1MW) was submitted by the Greek Ministry of Environment and Energy on 26 April 2022 for public consultation.

i Development of renewable energy

Simplification and acceleration of the licensing process

On 7 May 2020, material reforms in the RES regulatory sector were introduced through the enactment of Law 4685/2020, to simplify the licensing process for RES projects. This is the first set of rules that will be accompanied by the new legislative framework pending issuance in 2022. In implementation of the aforementioned Law, the new Producer’s Certificate Regulation has been enacted by Ministerial Decision YPEN/DAPEEK/114746/4230. The key pillar of the new Law is the replacement of the production licence with a producer’s certificate, issued electronically on the basis of a fast-track process. Law 4685/2020 also contains various transitional provisions of practical significance that apply to holders of installation and operation licences. Significant amendments relating to the introduction of shorter deadlines for the development of RES projects have also been introduced, as well as the simplification and acceleration of the environmental licensing process. One of the most significant amendments of Law 4685/2020, as in force, relates to the extension of the validity period of the environmental terms approval from 10 to 15 years, and this can even be extended to 21 and 19 years, respectively, if a project has in place an eco-management and audit scheme or ISO 14001. Similarly, shortened deadlines for the individual administrative steps for the issue, amendment and renewal of environmental terms approval decisions have been introduced. The role of certified evaluators has been upgraded; they may also be appointed by the public environmental authorities, following a producer’s request, to perform the duties initially undertaken by the environmental authorities.

Restructuring of the energy market

As already mentioned, on 1 November 2020 the Greek energy market was reorganised under the EU Target Model for the purposes of achieving energy market integration. The operation of the energy markets and the commencement of operation of the natural gas trading platform signal the development of integrated regional wholesale energy markets and market coupling based on flow-based capacity calculation. Energy transition, however, and further restructuring of the Greek and EU energy market are heavily influenced by the implications of both the Ukraine crisis and covid-19. It goes without saying that the principal uncertainties are those that have arisen in relation to the Ukraine–Russia war since the onset of the conflict. The effects of countermeasures aimed at Russia have seen Greece declare its willingness to gradually reduce Russian gas imports while also calling for alternative measures to tackle, among other things, the increase in energy prices and security of gas supply. The Greek government is currently considering measures to mitigate the impact on consumers if the European Union fails to agree on a common approach in the immediate future.

The RES special account

On 13 November 2020, the MEE announced a set of measures to address liquidity issues in the RES market and, more specifically, to eliminate the RES special account deficit on account of, inter alia, the adverse effects of the covid-19 pandemic. The measures for addressing the RES special account deficit, the status of which is a key indicator for the viability of the RES market, have had a positive impact and the special account ended 2021 with a surplus of €300 million (including the €70 million safety reserve). In light of the current energy crisis, a significant surplus has been created in the RES special account and a mechanism has been implemented to allow the transfer of these surplus amounts to the Energy Transition Fund and facilitate the government’s consumer support policies. The same approach will be taken for public service compensation account surplus amounts and CO2 emission revenues that are added to the sources being used by the Greek state to fund its subsidy support scheme for consumers.

In addition, the implementation of several EU directives²⁰ in Law 4920/2022 saw new provisions introduced to restructure the RES special account and create two new sub-accounts to offer support for new RES projects (as from 1 January 2021) and energy storage facilities (based on a feed-in premium model), subject to certain conditions.

RES tendering cycle for 2021 to 2025

Having decided to develop further the RES tendering procedures, the MEE has planned to launch and carry out six joint tenders for onshore wind parks and solar parks with technology-specific prices set until the end of 2024. For 2022, two joint RES tenders are anticipated for onshore wind parks and solar parks, each with total auctioned capacity of up to 1,000MW. The prolongation and restructuring of the framework applicable to RAE tenders is to be based on a new RES tendering model, which was to be applied in the first tender during 2022.

ii Energy efficiency and conservation

The 2012 Energy Efficiency Directive²¹ was transposed into Greek law by Law 4342/2015. However, the transposition of the 2018 amending Directive on Energy Efficiency,²² which sets energy efficiency targets of at least 32.5 per cent for 2030, is still pending. In addition to the foregoing, the improvement of energy conservation and the reduction of energy consumption are two of the main objectives of the national energy and climate plan. The aim is to improve energy efficiency regarding final energy consumption by at least 38 per cent in relation to the projected evolution of final energy consumption by 2030. Another aim is to increase the use of natural gas as the intermediate fuel for switching to a low greenhouse gas emissions model in final consumption sectors, by at least 50 per cent compared with 2017. To achieve these goals, the applicable legal framework sets out energy efficiency measures for the building and transportation sectors, targeting the transition to sustainable mobility.

Energy efficiency of buildings

Buildings are currently responsible for approximately 40 per cent of energy consumption. Therefore, the need to promote an improvement in buildings’ energy efficiency through renovation is evident, as is the need to adopt corresponding measures regarding renewing stock where buildings are at end-of-life. Reducing the energy consumption of buildings requires an increased use of energy-efficient and low-emission heating systems, and the construction of smarter buildings with improved insulation materials. Other highly important policies are the optimal use of RES technologies to cover heating and cooling needs, RES self-production systems to cover buildings’ electricity needs, and also strengthening the role of consumers. Large-scale energy efficiency programmes for homes and the upgrade of the national building stock are some of the main priorities of the government. The latest edition of the saving-at-home programme subsidising energy efficiency upgrades of buildings is currently ongoing.

Transport

The use of vehicles powered by alternative fuels and electricity, a drop in unit energy consumption per type of vehicle, the use of second-generation biofuels, the complete electrification of railway infrastructure and the use of hydrogen trains will totally transform the technological structure and fuel mix used in the transport sector. Given that Greece is a leader in shipping, it is important for the country to promote emission reduction technologies in shipping in compliance with the decision of the International Maritime Organisation of April 2018 to reduce carbon intensity by 40 per cent by 2030 and by 50 per cent in total (70 per cent intensity) by 2050.

E-mobility

Through sustainable town planning and by addressing the demands of mobility and infrastructure, cities are called upon to play a pivotal role. In particular, there must be a shift from the conventional traffic planning used to date, giving priority to the unhindered movement of vehicles and to sustainable urban mobility. This shift will result from integrated and combined town and traffic planning and policies, aimed at reducing the use of vehicles, ensuring parking management and implementing arrangements, networks and accessibility for all (pedestrians, bicycles, mobility vehicles, mass transport vehicles). Law 4710/2020 was introduced governing e-mobility and enabling the installation of public electric vehicle charging stations, to develop the market for low- and zero-emission vehicles, and recharging infrastructure. The Law also establishes a regulatory framework for the e-mobility market by setting various incentives (tax benefits, traffic privileges and reductions in value added tax for electric vehicle purchases), which are implemented through secondary legislation.²³ Furthermore, according to the draft of the new climate law, the following e-mobility measuers will also be implemented:

1. by 1 January 2030, only zero-emission vehicles will be sold on the domestic market;
2. by 1 January 2025, new taxis in Athens and Thessaloniki must be electrically powered or at least be zero rated for emissions; and
3. by 1 January 2023, at least one quarter of company vehicles must be wholly electric vehicles or hybrid electric vehicles with external pollutant ratings limited to 50g CO2/km.

iii Technological developments

The period 2022–2030 is expected to be crucial for the development of innovative technologies that will help Greece to attain its ambitious energy efficiency objectives. Greece’s new planning supports and promotes the strengthening of the role of consumers and the involvement of end users in the energy market. The development of smart grids makes use of the potential of dispersed production, ensures the efficient functioning of the market, saves energy and contributes to meeting emission-reduction targets. DSOs face considerable challenges, as they represent the European strategy’s main pillar for utilising renewable energy potential, reducing carbon emissions and improving energy security and efficiency. One of the main pillars of the ongoing transformation process includes the implementation of smart metering systems. Smart metering, which is intended to assist consumers in becoming active participants in the electricity market, is one of the main objectives included in HEDNO’s capital expenditure programme for the coming years. When completed, the programme will contribute significantly towards the rational use of energy by final consumers.

It is evident that Greece is undergoing:

1. a remarkable transformation of several pillars of the energy sector, focusing mainly on energy efficiency, the decommissioning of PPC’s lignite plants and the implementation of the ‘just transition’ plan;
2. the interconnection of the islands with the mainland grid;
3. the full roll-out of smart metering systems (assisting consumers to become active participants in both electricity and natural gas markets);
4. the reduction of greenhouse gas emissions;
5. the adoption of a remuneration mechanism for grid sufficiency to replace a transitional mechanism for remunerating flexibility; and
6. the move towards green energy and the initiation of a number of energy sector privatisations.

The operation of the EU Target Model is expected to bring multiple benefits, leading ultimately to lower prices for the final consumer and, at the same time, to more efficient management and pricing of cross-border energy.

However, since the implementation of the EU Target Model in Greece, several instances of market turbulence, together with the impact of the covid-19 pandemic and recently the war in Ukraine, have led to significantly higher wholesale prices. In particular, the unexpected changes in energy demand, the modifications to established interconnections with neighbouring countries, and the increase in the price of fuel (such as natural gas, coal or oil) and CO2 prices, as well as the existence of several macroeconomic conditions, played a crucial role in making electricity prices intensely unpredictable. However, the majority of the associated costs have been passed on to final customers by their suppliers, following activation of the wholesale market-related clauses included in supply contracts and despite the existence of hedging opportunities provided through the energy exchange financial energy market, which have been available to market participants since March 2020 but have yet to be exploited significantly.

To mitigate the disruption caused by the Ukraine crisis, Greece has decided to increase domestic coal production (as a short-term measure), accelerate the exploitation of offshore natural gas deposits and expand its natural gas infrastructure and boost its LNG capacity with additional storage space.

Last but not least, RAE has opted for the implementation of a transitional hybrid solution for Crete, to cover the island’s energy needs. In particular, the new Phase I interconnection line with the Peloponnese will operate as a ‘virtual’ power plant until the larger Phase II Crete–Attica interconnection project commences operation, which is expected by the end of 2023. This transitional solution will see Crete purchasing the electricity transmitted through the small-scale grid link to Target Model energy markets. HEnEx will submit the orders on behalf of the load representatives and thermal units generating and supplying electricity in Crete in the DAM and IDM electricity markets, and DAPEEP will be in charge of submitting orders for RES production.

Greece has set quite ambitious energy targets for the coming 2022–2030 period. The country has committed to climate neutrality and, in an intermediate step, has revised its 2030 climate ambition, committing to a reduction in emissions of at least 55 per cent by 2030 and 80 per cent by 2040 compared with 1990 levels.

At the same time, the decarbonisation of electricity production has already gone a long way in Greece, with the market share of lignite falling significantly while that of RES (including large hydro) increased substantially. According to the data published by IPTO, between 2012 and 2021, the market share of RES (including large hydro) tripled from 14 per cent to 43 per cent, and the market share of lignite fell from 54.5per cent to 10 per cent. The downside was that this progress was, until recently, achieved through high feed-in tariffs, which have burdened both industry and consumers with high energy costs. These difficulties have now been compounded by the Ukraine energy crisis. However, the increase in RES technologies together with government subsidies to tackle the Ukraine crisis and the implementation of specific market mechanisms have been combined in an attempt to mitigate high energy prices for end users.

On the other hand, other necessary developments are still in their infancy. The increased penetration of wind and solar electricity production necessitates the development of electricity storage, although the relevant legal framework is still currently under public consultation. Sector coupling through the electrification of mobility and heating is significantly behind that of other European countries, with the relevant policy framework having been introduced only quite recently. The production of hydrogen, ammonia or methane from renewable sources, the development of offshore wind farms and hybrid generation projects are also at the planning stage. Although several regulatory reforms need to be put in place to achieve these objectives, and their realisation entails significant investments, they nonetheless represent a considerable opportunity for RES and energy infrastructure project development in Greece.

The energy crisis triggered by the war in Ukraine, combined with the increase in the price of emission allowances, has heightened the sense of urgency regarding acceleration of the energy transition, to avoid economic and social crises stemming from high energy prices. In addition, technological developments in renewable energy production, energy storage, electrical mobility and heating give Greece, for the first time, the opportunity to reduce its dependence on energy imports and insulate itself against the energy price volatility that has plagued the country’s economy since the 1970s. Energy regulation is both shaping and being shaped by these rapid developments.