April 2015
Energy Union, a catalyst for the energy future of GreeceEurope has put at the center of its priorities the Energy Union, building it upon five pillars: a) energy security, solidarity and trust, 2) fully integrated European energy market, 3) energy efficiency, 4) low-carbon economy and 5) research and innovation. The aim of the Energy Union is to promote a single system through which energy will flow through Europe without obstacles to competition, with an optimum use of available energy resources and infrastructure and for the benefit of European consumers.
The Energy Union is not only the first political priority at the moment in Europe. It is the corner stone of the realization that both the current international environment, as well as that which will be formed within the next decades, will have a growing global character and that in such an environment Europe can survive and continue to ensure conditions of prosperity and justice for its citizens, only if it faces with determination the economic, demographic and energy-climate challenges. Greece unfortunately appears not to have reached the same level of realization.
Focusing on three of the five basic pillars on which the Energy Union is built, we see both the major disparities of our country versus the European acquis and the energy strategy, as well as the unique opportunities created for Greece by the Energy Union.
1st Pillar: Energy Security
Among the priorities of the first pillar, the European Union places the diversification of supply sources through initiatives such as strengthening the Southern Corridor and creating a commercial natural gas hub in the eastern Mediterranean. Greece has the unique opportunity to become an energy corridor through the pipelines that bring gas from the Caspian region and also with the pipelines connecting the Balkan region, creating a vertical axis, as well as through any alternative that will be selected for the transfer of gas reserves of the Eastern Mediterranean to Europe. The role also of the energy corridor will be acquired through the new electrical interconnections (between Crete and the mainland system and then with Cyprus and Israel, new interconnections with Italy, Bulgaria). However, in order to make that feasible it is necessary a) for Greece to operate fully within the European framework and acquis of energy and b) to ensure the existence of competitive markets for natural gas and electricity. Only with such markets and the emergence of our country into an energy hub, the commercial transport of these vast quantities of energy can be possible through energy corridors of gas and electricity.2nd Pillar: Fully Integrated European Energy Market
A prerequisite for the single European market is the existence of initially integrated competitive markets at a national level, which subsequently are linked together and create extensive regional markets (which has already begun in Western and Northern Europe). The electricity market in Greece is characterized by its incomplete design which does not permit for the revelation of the real value of energy. For example, in Greece the electricity market has only a day-ahead market, while in EU countries electricity markets are composed of forward, day-ahead, intraday and real time balancing markets. This shortcoming does not allow for the proper valuation of energy and other services (such as security of supply and adequate flexible capacity) and the result is shrinking competition and higher costs for consumers. Moreover, Greece continues to have the majority of the islands not connected to the mainland’s system. This leaves the islands exposed to a number of risks, such as the blackout that happened in Santorini at the peak of the tourist season, while it places a significant burden on all the country's consumers because of the operation of expensive oil-fired units on the islands. Especially for Crete, for which the lack of interconnection costs to consumers additionally 400 million Euro per year, the total cost of the interconnection project is less than 1 bln Euro. This project can be funded directly from the 'Investment Plan for Europe' and EIB programs, as return on investment is achieved in a few years. Respective funding opportunities can be granted to the interconnection of the rest of the islands. In addition, 15 years after the legislative liberalization of the market, PPC (Public Power Corporation) has still exclusive access and exploitation of national energy resources (lignite - hydro) and private companies operating in the market fail thus to compete on equal terms. The result of this situation is that PPC controls 97% of retail, making Greece one of the most closed markets in electricity on a European level.3rd Pillar: Transition to a low carbon economy
In October 2014, the EU Council - in view of the upcoming (December 2015) global agreement for climate change in Paris - set the energy/climate objectives of Europe for 2030. These include a commitment for a 40% reduction of emissions associated with the greenhouse effect, at least 27% participation of RES in the energy mix and at least 27% energy savings. Similar targets for reducing carbon emissions adopt more and more other developed economies like the US, but also developing such as China. Such an international environment, particularly in developed countries, poses great challenges to investments in coal-fired power plants and requires first an optimal management, with a mainly medium-term character, of the existing fleet of coal units and secondly the careful and thoughtful long-term planning for the transition to the era where electricity production will equal almost zero carbon emissions.At the same time, however, and in contrast to this international trend, Greece announced its intention to re-operate unit 3 of the Ptolemais lignite-fired plant, which suffered severe damages in November 2014 due to a fire. It is one of the oldest and most expensive lignite plants in Greece, and for this reason PPC had planned its permanent withdrawal, in agreement with the new emission limits set by the EU Directive on industrial emissions by the end of 2015.
In conclusion, we are witnessing the economically inefficient, and ultimately detrimental to the interests of consumers, deviation of Greece from the European Union with regards to energy markets, as well as a trend, manifested by announcements and statements to doubt the central energy policy of the EU, as this is presented within the Energy Union project.The Energy Union, however, can bring funding for modernization of infrastructure, job creation, cheaper energy and upgraded geopolitical role for the country. A possible failure of Greece to exploit this unique opportunity will be crucial to the energy and economic future of the country.