RAE, the Regulatory Authority for Energy, has decided to award Greece’s power grid operator IPTO the task of swiftly establishing a special purpose vehicle (SPV) for the development of Crete’s urgently needed major-scale electricity grid interconnection with Athens, sources have informed, confirming a previous energypress report.

Highlighting the level of urgency the matter has acquired, IPTO officials were informed of the decision over the phone and asked to set up an SPV as soon as possible.

Crete faces a looming energy sufficiency threat as of 2020 because an exemption to EU law concerning power station emission limits for local high-polluting units, such as those operating on Crete, ends in December, 2019. A number of power stations on the island will need to be withdrawn.

According to sources, the SPV will initially stand as a wholly-owned IPTO subsidiary while, three months later, by the end of the year, a tender will be staged inviting investor-operators to bid for a minority 49 percent stake in the venture.

The Euroasia Interconnector consortium, responsible for the wider Euroasia Interconnector, a PCI-status project planned to link the Greek, Cypriot and Israeli power grids via Crete, will be offered priority rights for a 39 percent minority stake, as noted in a Memorandum of Cooperation signed by IPTO and the Euroasia Interconnector consortium.

If Euroasia Interconnector, a consortium of Cypriot interests, does not exercise this priority right, then the minority 39 percent stake will be offered to network operators such as Belgium’s Elia or France’s RTE, both of which have expressed interest. They would be expected to also seek acquiring the remaining 10 percent stake.

IPTO and Euroasia Interconnector, a consortium of Cypriot interests, have been involved in an extended dispute for control of the wider project’s Cretan segment.

The RAE decision comes as a counterproposal to a European Commission initiative that gave the Euroasia Interconnector consortium until the end of the year to resolve its dispute with IPTO. But it does give the consortium some time to decide.