Development of an underground natural gas storage facility (UGS) in the almost depleted South Kavala offshore natural gas field will require a solution incorporating hydrogen into the investment, estimated between 300 and 400 million euros, which would categorize the project as eco-friendly and facilitate European Investment Bank financing.
As has been made clear by the energy ministry, Greek privatization fund TAIPED, currently conducting a cost-benefit analysis, will need to consider this prospect and plan for a storage facility holding hydrogen or a mix of this fuel with natural gas. Installation of carbon-capture and storage technology may also be helpful.
The EIB will stop financing conventional natural gas projects as of 2022. The bank may exempt from this rule projects limiting their emissions to 250 grams per KWh of energy produced.
This emission limit can only be achieved if natural gas is mixed with hydrogen, a prospect requiring higher-cost technologies but aligning the UGS with EU policies for full decarbonization in Europe by 2050.
The privatization fund has just launched an international tender for the South Kavala UGS in an effort to achieve EU funding for the project before a crucial EU funding deadline expires.
As a Project of Common Interest, this UGS is eligible for funding through the EU’s Connecting Europe Facility, vital for the investment’s sustainability. However, investors behind the project will need to submit their CEF application by the end of 2020.
The UGS South Kavala is intended to serve as energy infrastructure that will enhance supply security in the Greek market as well as southeastern Europe.