Island Decarbonization Fund

Island RES project support of at least €1.59bn via new fund

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The energy ministry is planning distribution details of proceeds to be collected by the forthcoming Island Decarbonization Fund through auctions, in 2024 and 2025, of 25 million CO2 carbon emission rights that have been allocated to the fund.

These rights are expected to raise between 1.5 and 3 billion euros through auctions over the two-year period.

Proceeds raised by the CO2 carbon emission rights allocated to the fund will be used to offer subsidy support for island projects such as new RES and battery installations, grid interconnections, offshore wind farms, as well as island infrastructure development facilitating greater RES penetration.

The Island Decarbonization Fund’s launch, now imminent, will be officially launched with the signing of an agreement by the European Commission’s Directorate-General for Climate Action (DG CLIMA) and the European Investment Bank.

As part of its planning for the new fund, the ministry is dividing prospective projects into two tiered groups, the first of which will be given priority status to secure 1.59 million euros from the Island Decarbonization Fund, roughly the minimum sum expected to be raised by CO2 carbon emission rights.

 

Island Decarbonization Fund, to offer €1.5-3bn, imminent

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The Island Decarbonization Fund, which has been allocated 25 million CO2 emission rights expected to raise between 1.5 and 3 billion euros through auctions, is set for launch, energy minister Thodoros Skylakakis told an event on Rhodes yesterday.

He was speaking at the Rhodes Co-Lab Sustainable Destination, an event co-organized by the South Aegean Administrative Region and the TUI Group to promote the transformation of Rhodes into a sustainable and resilient tourist destination.

The proceeds to be raised by the CO2 emission rights, at auctions in 2024 and 2025, are planned to co-finance up to 60 percent of the Greek islands’ decarbonization effort.

The Island Decarbonization Fund will officially be launched with the signing of an agreement by the European Commission’s Directorate-General for Climate Action (DG CLIMA) and the European Investment Bank.

The energy ministry has already begun specifying initiatives that will receive support through the Island Decarbonization Fund. Renewable energy projects are expected to secure the biggest share of the fund, followed by electrical grid interconnections.

The remaining amount is expected to go towards financially supporting various other initiatives, including cold ironing (emission-reducing shore-to-ship power supply).

Deputy energy minister Alexandra Sdoukou told the Rhodes event that a 500 million-euro amount is already anticipated from the Island Decarbonization Fund for an electrical interconnection linking the Dodecanese islands with the mainland.

Sdoukou also made note of plans for the development, on Rhodes, of a RES facility with a storage unit promising a capacity of at least 50 MW. This project will increase the RES share of the island’s energy mix to at least 40 percent, she added.

Main offshore wind farms plan favored over pilot projects

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The energy ministry is expected to abandon plans for floating offshore wind turbines as part of a wider pilot project, now seen as a time-consuming effort, and instead focus on an existing national plan for development of offshore wind farms with a capacity of 1.9 GW in Greek sea territory.

As previously reported, the energy ministry was considering a second lot of offshore wind pilot projects with floating wind turbines, the aim being to support small-scale supply ahead of the development of larger projects meeting 2030 targets.

This portfolio now in question represents floating offshore wind turbines with a capacity of roughly 400 MW which, combined with two fixed-base pilot projects at an area off Alexandroupoli, northeastern Greece, make up a total portfolio of offshore wind pilot projects measuring 1,000 MW. The pilot project for floating offshore wind turbines had been linked to a plan for partial financing through the Island Decarbonization Fund.

The energy ministry plans to submit a proposal to the European Commission and the European Investment Bank (EIB) to secure investment support for the offshore wind farms development plan through the Island Decarbonization Fund.