Executive summary Greece’s energy and climate policies are centred on achieving net zero emissions by 2050 while ensuring energy security, improving economic competitiveness and protecting vulnerable consumers. The National Energy and Climate Plan (NECP), adopted in 2019, is the main document setting energy and climate policy through 2030 and includes targets and supporting measures to put the country on a path to net zero emissions. The National Climate Law, adopted in May 2022, sets targets to reduce total greenhouse gas (GHG) emissions by 55% by 2030, by 80% by 2040 and to reach net zero emissions by 2050. It defines key emissions reduction measures, including the phase-out of lignite-fired generation by 2028. Greece has seen a reduction in the share of fossil fuels in its energy supply, mainly because of decreasing use of lignite for electricity generation. However, fossil fuels are still the dominant energy source in Greece, and strong efforts are needed to reduce fossil fuel demand in line with GHG emissions targets. From 2010 to 2021, the share of fossil fuels in energy supply fell from 90% to 82% of total energy supply (compared to an IEA average of 78% in 2020). From 2005 to 2021, the share of lignite-fired generation fell from 60% to 10%, driving down the carbon intensity of electricity generation. The decline in lignite-fired generation was offset mainly by increased gas-fired generation, along with growth in generation from wind and solar photovoltaics (PV).

Energy supply and demand Greece is reliant on imported fossil fuels to cover most of its energy demand. Historically, a notable share of electricity demand was covered by lignite-fired power plants located next to lignite mines in the north of Greece. However, domestic lignite production has steadily declined as Greece phases out lignite-fired generation. From 2011 to 2021, domestic lignite production dropped from 314 petajoules (PJ) to 60 PJ. Over the same period, domestic energy production from renewables grew from 86 PJ to 136 PJ, mainly because of increasing electricity generation from wind and solar PV. Greece produces only a marginal amount of oil (2.4 PJ in 2021) and natural gas (0.2 PJ) but has indicated interest in increasing domestic oil and gas production. From 2011 to 2019, Greece’s total energy supply (TES) decreased by 18%, from 1 122 PJ to 924 PJ, driven mainly by the prolonged contraction of the economy.

Energy production, supply and demand in Greece, 2021

In 2020, TES dropped by 11% to 824 PJ, mainly due to the greatly reduced transport energy demand resulting from the Covid-19 pandemic. It rose again to 851 PJ in 2021. Greece has seen a reduction in the shares of fossil fuels in its energy supply, but fossil fuels are still the dominant energy source. From 2011 to 2021, the combined shares of fossil fuels in TES fell from 91% to 82% of TES (compared to an IEA average of 78% in 2020). Oil covers the largest share of TES, and from 2011 to 2021, the share of oil in TES fluctuated around the average of 47%. Over the same period, a transition from lignite-fired generation to gas-fired generation reduced the share of coal in TES from 29% to 8.4%, while the share of gas in TES increased from 15% to 27%. From 2011 to 2021, the share of solar and wind in TES steadily increased, from 2.2% to 8.2%, and the share of bioenergy and waste grew from 4.8% to 6%. The share of electricity imports fluctuated between 0.6% and 3.9%. Electrification of energy demand is increasing. From 2011 to 2021, the share of energy demand (TFC) covered by electricity increased from 23% to 28% (compared to an IEA average of 23% in 2020).

Total energy supply and demand by source in Greece, 2005-2021

Emissions drivers and carbon intensity The main drivers for GHG emissions reductions were declining GDP and a reduction in the carbon intensity of electricity and heat generation. Greece’s prolonged economic crisis reduced GDP by 27% from 2008 to 2013, with GDP growth only returning in 2017. The pandemic had a major impact on GDP, which fell by 14.8% in 2020, then again by 9.9% in 2021. However, emissions rebounded from 2020 despite the continuing decline in the carbon intensity of electricity and heat generation. From 2005 to 2021, Greece’s carbon intensity of electricity generation dropped substantially, from 791.6 gramme CO2/kWh to 342.4 g CO2/kWh. This was the fifth-largest reduction in the carbon intensity of generation among IEA member countries over this period.

Energy-related greenhouse gas emissions and main drivers in Greece, 2005-2021

Climate targets Greece’s National Climate Law, adopted in May 2022, sets targets to reduce total GHG emissions by 55% by 2030 and by 80% by 2040 (versus 2005) and to achieve net zero emissions by 2050. Greece’s GHG emissions are also subject to targets and regulations under EU laws and directives. GHG emissions from Greece’s large electricity plants, energy-intensive industrial facilities and commercial aviation inside Europe are regulated under the EU Emissions Trading System. The ETS sets annual caps on emissions and requires regulated facilities to acquire tradable allowances for their emissions. Greece’s non-ETS emissions (transport, buildings, agriculture, waste and non-energy intensive industry) are subject to a 2020 target under the EU Effort Sharing Decision (ESD) and a 2030 target under the EU Effort Sharing Regulation (ESR). In combination, the ETS, ESD and ESR aim for a 20% reduction in EU-wide GHG emissions by 2020 and a 40% reduction by 2030 (both versus 1990 levels).

Energy demand and efficiency improvements Energy demand in Greece significantly dropped between 2007 and 2014, but most of this decrease was due to the effects of the economic crisis. More recently, Greece has achieved some energy savings, especially since 2017, as thanks to energy efficiency improvements, energy consumption did not follow the partial economic recovery. These energy savings were achieved mainly in the residential sector, thanks to the shift from oil-fired to more efficient heating systems, and in passenger transport.

Estimated energy savings from efficiency in Greece, 2000-2019

Energy efficiency targets Under the EU Energy Efficiency Directive (EED), each EU member state has national energy efficiency targets for 2020 and 2030 that contribute to achieving EU-wide targets to reduce energy demand by 20% by 2020 and by 32.5% by 2030 (compared to a business-as-usual projection). The national targets are defined as reductions in primary energy consumption (PEC) and final energy consumption (FEC). Greece’s 2020 targets are set in its National Energy Efficiency Action Plan. Greece’s 2030 targets are set in its NECP (Figure 3.3). Looking ahead to 2050, Greece’s Long-term Strategy sets a road map to renovate almost the entire building stock by 2050, along with intermediate targets of reducing oil use by 90% by 2030 while increasing the use of electricity by 20% by 2030.

Greece’s 2020 and 2030 energy efficiency targets and status, 2005-2021

Greece achieved its 2021 energy efficiency targets. However, the 2020 targets were adopted in June 2008, just before the start of the global financial crisis, and reflected a positive perspective of the growth of the Greek economy. While Greece successfully implemented some energy efficiency policies in the period leading up to 2020, most of the reduction in energy demand over this period resulted from the negative impacts of Greece’s prolonged economic contraction and the Covid-19 pandemic.

Transport energy demand and efficiency Transport sector TFC decreased from 306 PJ in 2005 to 232 PJ in 2021, when it accounted for 36% of TFC. In 2021, the Covid-19 pandemic and the related restrictions caused a 65% drop in energy demand in transport compared to 2019. Diesel is the main fuel used in the transport sector, covering 48% of transport energy demand in 2021, followed by gasoline (36%). Other oil products (LPG, kerosene and fuel oil) accounted for 12% and biofuels for 3.9%. Natural gas accounted for 0.4% of transport sector energy demand in 2021. The share of cars fuelled with LPG (6.5% in 2020) is double the EU average (3%). Most energy demand in the transport sector comes from road transport, accounting for 85% of transport energy use in 2019. Domestic navigation accounts for 11%, while the IEA average is 4%. Domestic aviation counts for 4% and rail for 0.4% (the IEA average is 4%). While road transportation relies mostly on oil products, electricity is used mainly in rail and accounted for around 0.2% of total transport demand. Almost two-thirds of energy consumption of rail is provided by electricity; the rest is covered by diesel.

Total final consumption in transport by fuel, 2005-2021, and by mode in 2019

Renewable energy targets Under the EU Renewable Energy Directive, Greece has 2020 and 2030 targets for renewables in gross final consumption and electricity generation, heating and cooling, and transport, which are intended to support the achievement of EU-wide targets for renewables in gross final consumption to reach 20% by 2020 and 35% by 2030 (the 2030 target is likely to be increased to 45%). Greece’s 2020 targets and supporting measures are set in its National Renewable Energy Action Plan. The 2030 targets and supporting measures are set in its NECP.

Greece’s renewable energy targets and status, 2005-2021

Greece overachieved its 2020 targets for renewable energy in gross final energy consumption, electricity generation, and heating and cooling. However, the achievement of these targets partly resulted from the significant reduction in energy demand caused by Greece’s prolonged economic contraction and the Covid-19 pandemic. The government expects that energy demand will increase with economic recovery. Increased energy demand will require a faster pace of renewables deployment than seen in the last years to ensure the share of renewables increases in line with 2030 targets. This is especially true for the transport sector, where Greece did not achieve the 2020 renewables target. In October 2020, the European Commission published its review of Greece’s NECP, noting that the 2030 target for renewables in gross final energy consumption exceeds the needed contribution to the EU-wide target. However, in December 2020, the 2030 EU-wide GHG emissions reduction target was increased from 40% to 55%. To support the increased target and the REPowerEU efforts to end reliance on Russian energy, the European Union is updating numerous policies through the Fit-for-55 package. This includes significant changes to the Renewable Energy Directive, with a proposal to increase the EU-wide 2030 target for renewable energy in gross final energy consumption from 32% to 45%. Greece will likely need to increase its 2030 renewable energy targets to support the achievement of these more ambitious EU targets.

Greece is a net importer of electricity. Net imports have varied notably since 2010, ranging from a minimum of 1.8 TWh in 2012 to a maximum of 9.9 TWh in 2019. The variations in imports were driven mainly by economic conditions in Greece that affected electricity demand and market competition between domestic generation and imports; imports have increased as low-cost lignite generation declined. Greece is making substantial investments in electrical interconnections to support further integration with the European electricity system and aims to become a net electricity exporter by 2030.

Greece’s electricity imports and exports, 2005-2021

Major existing and planned electricity infrastructure in Greece, 2022

Regional departments of the Greek electricity distribution system operator

Wholesale market To support better integration with the European common wholesale electricity market and ensure more competitive and efficient wholesale electricity trading, Greece is implementing structural changes to its wholesale electricity market. A day-ahead mandatory pool system, in operation since 2005, was replaced in 2020 with three wholesale spot markets (day-ahead, intraday and balancing) and a derivatives market. The day-ahead, intraday and derivatives markets are operated by Hellenic Energy Exchange (HEnEX), while transaction clearing is performed by the Athens Exchange Clearing House (ATHEXClear) for the derivatives market and the Hellenic Energy Exchange Clearing House (EnExClear) for the spot markets. The balancing market is operated by the TSO.

Operation of the Greek wholesale electricity market

The derivatives market offers future contracts for both base load and peak load profiles, covering monthly, quarterly and yearly periods. Participants in the derivatives market can be generators, suppliers, traders, aggregators and consumers. To date, this market has no liquidity, with no significant contracts concluded. Aiming to address the issue of limited liquidity in the bilateral and forward products and to enhance competition in the derivatives market, the RAE issued Decision 928/2022 to increase the cap on quantities of forward exchanged and bilateral contracts of vertically integrated suppliers from 20% to 30%, for suppliers with a market share higher than 40% in supply (thus, applying to PPC only). The day-ahead market is the main spot market for trading electricity. It is an auction market run at noon on the day preceding the delivery day and covers the entire delivery day in 24-hour units. The market participants are generators, consumers, suppliers, traders and aggregators. Participation in the day-ahead market is mandatory for thermal generators. Participants are allowed to submit orders between -500 EUR/MWh and 3 000 EUR/MWh. The day-ahead market is coupled to other European day-ahead markets through the Single Day-Ahead Coupling project via the Greece-Bulgaria and Greece-Italy interconnections.

Retail market Greece’s retail gas market was fully liberalised in 2018, when the monopoly on retail gas supply by EPA Thessaloniki/Thessaly and EPA Attica was abolished (these companies were created during the unbundling of commercial and network activities of the DEPA-owned DSOs in 2016). The retail gas supply companies ZENITH and NATURAL GAS, which resulted from the privatisation of EPA Thessaloniki/Thessaly and EPA Attica, respectively, have maintained dominant market positions based on the volume of retail sales and the number of connections. The HHI values for the retail gas market have improved, dropping from 6 453 in 2015 to 4 702 in 2018, with a strong drop following liberalisation to 2 317 in 2019, falling to 2 147 in 2020 and 2 079 in 2021. However, it should be noted that in their local areas, the incumbent in the Thessaloniki-Thessalia retains an 80% share market share, and the incumbent in Attika retains a 79% market share.7

Gas retail market share by company of gas customers in Greece, 2020

Oil emergency response policy Greece maintains stocks of crude oil and oil products to ensure adequate supplies during emergency situations and to meet IEA and EU stockholding obligations. IEA member countries are obliged to hold emergency oil stocks (crude or oil products) equivalent to at least 90 days of annual net oil imports or 61 days of consumption, whichever is higher. Greece has consistently held stocks above the IEA 90-day obligation, with 141 days of stocks at the end of August 2022 (Figure 8.9). In Greece, oil stocks are held by private industry at storage sites across the country. The legal framework permits keeping up to 30% of stocks in other EU member states, transposing fully the provisions of the respective European Directive. In 2021 and 2022, Greek oil companies signed ticket agreements with oil companies located in Malta and Cyprus to hold emergency stocks. Legislation allows for the creation of a central stockholding agency that could purchase and manage government-held oil stocks. However, no such agency exists, and the government has not indicated any interest in creating one. Under Greek law (Law 4123/2013), all companies that import oil to Greece and large end users importing petroleum oil products for own consumption are required to hold oil stocks equivalent to 90 days of their net imports during the previous calendar year.

Emergency oil stocks by type in Greece, January 2011 to September 2022

Refineries are required to maintain at least one-third of their obligation in the form of final oil products. For the remaining two-thirds of their obligation, refineries can keep stocks of crude oil, refinery feedstocks and additives/oxygenates, or final oil products. All other companies covered by the stockholding obligation must hold stocks of each oil product they imported during the previous calendar year. In addition to the obligation to hold emergency stocks, each oil trade licence holder, with the exception of bitumen marketing licences, is required to maintain commercial stocks equivalent to at least five days of sales realised by each holder in the domestic market during the previous year, for each category of products accordingly with the licence category.

Source:http://IEA