The weekend read: Greek solar investment soars

From pv magazine 06/2021

There is no doubt that Greece’s flagship project in the post-lignite era is the development of 3 GW of solar PV capacity in former coal mines from state-owned Public Power Corp. (PPC). Of this, a massive 2 GW solar farm is expected to be built in Ptolemaida, northern Greece, and a 1 GW installation will be developed on the Peloponnese Peninsula in southern Greece.

Both projects are split into several smaller chunks that the utility aims to develop alone or in partnership with other investors. Germany’s RWE is one of those investors. A spokesperson for RWE told pv magazine that initially, PPC and RWE signed a memorandum of understanding aiming to “pursue potential collaboration in order to exchange know-how in decarbonization, as well as in the development and implementation of renewable energy projects in Greece.” However, added RWE, the two parties have now signed a letter of intent “to strengthen the collaboration and focus initially on the development of solar projects and onshore wind in the Greek market, with a total capacity of at least 2 GW.”

RWE chose not to provide further information regarding the timeline and the policy mechanisms supporting this investment. It is widely expected that the two will participate in Greece’s future renewable energy tenders aiming to win contracts for projects supported by premium tariffs.

The RWE spokesperson was happy to reveal that although the company’s “first strategic focus is on the development and implementation of solar farms … we always have an eye on developments for energy storage facilities and hybrid projects across all European markets wherever it makes economic sense, including Greece.” RWE added that it is currently focusing on a number of solar projects together with PPC within the boundaries of a former open pit lignite mine. However, the two companies may broaden their geographical scope later on.

RWE also recently won a contract to build a combined 14.4 MW photovoltaic farm with a 9.6 MWh storage facility in Germany’s Tagebau Inden open-cast mine and it is very much interested in transferring its experience to Greece, said the RWE spokesperson. The case, though is that Greece, will help RWE to diversify its business and make it fit for the 21st century. Based on figures provided by RWE, by the end of last year, the company had a global solar portfolio of just 229 MW in operation, including PV projects in Europe in the order of 56 MW.

EVs, batteries

RWE is not the only German investor eyeing Greece with clean technology plans. The country’s state investment and trade promotion agency, Enterprise Greece, recently signed an initial agreement with Germany’s Next.e.GO Mobile SE, an electric vehicle manufacturer, to establish a production facility in Greece.

The agreement refers to an “in principle collaboration,” which sees the two parties form a working group to detail the framework and conditions for the implementation of the full-scale manufacturing facility of the German company in Greece. Should this collaboration come to fruition, Greece will acquire its first local manufacturing base for electric vehicles. Next.e.GO Mobile SE also intends to establish a Technology and Innovation Campus (TIC) in Greece.

Another recent development currently being implemented is a move by Athens-based Sunlight to expand its local R&D and battery manufacturing bases.

Specifically, the European Commission’s Directorate-General for Competition (DG COMP) approved state aid a few months ago for a Sunlight research project on energy storage. Thus, Sunlight will receive €49.9 million from Greece’s government toward the development of an R&D center in Athens, aiming for the development of innovative lithium battery technologies.

The state aid funds will comprise part of Greece’s National Strategic Reference Framework (NSRF), which in turn is mainly funded via the European Union and backed by Greek government funding. Sunlight will cover the remaining €55.26 million of the project costs with own funds, amounting to a total €105 million investment.

The new R&D center in Athens will complement the research work developed by Sunlight’s R&D center in Xanthi, northern Greece, which is already in operation. Sunlight said the new investment will focus on the development of battery solutions for automated guided vehicles (AGVs), electric city buses and the shipping industry, as well as smart storage systems for renewable energy sources.”

The company currently operates two manufacturing plants in northern Greece: one battery manufacturing plant in Xanthi and a recycling plant for used batteries in Komotini. It also operates a battery assembly unit in Italy. Sunlight’s new investment, following the approval of Greek state aid, will boost its R&D program and the industrial deployment of its battery solutions. It aims for a production capacity of up to 1.1 GWh of lithium-ion cells, 1.1 GWh of batteries, and the development of green battery cells for heavy-duty applications.

Sunlight’s investment is expected to create 800 to 1,500 direct and indirect jobs, in Greece as well as in Sunlight’s subsidiaries in Italy, Germany and the United States, which demonstrates the joint nature of the EU policy and business.

Car manufacturing giant Volkswagen has also set on a route to turn the Greek island of Astypalaia into a global model for smart and emissions-free mobility, using the island as a testbed for its e-mobility and smart mobility business model. Initially, public vehicles will be replaced by EVs, then inhabitants will be incentivized to replace their private cars with electric ones. New car sharing services will also be put forward. Energy will primarily be generated from local green power sources, said Volkswagen, and the project will initially run for six years.

High-value production

All previous projects, but most importantly, the Sunlight and Next.e.GO Mobile SE’s investments in Greece, are vital for the country to make the shift toward high-value production. Modern economies do not seek to attract any type of investment, but aim predominantly to develop production with high-value output that can add to a country’s growth rapidly. This is definitely the case for Greece, which seeks to leave years of financial turmoil behind, investing in a high-value future. Manufacturing in energy storage and EVs offers such an opportunity, as does developing home-grown R&D knowledge.

A widespread problem that occurs with this type of investment is that it requires locations and states with developed infrastructure (e.g., roads and ports) in place, as well as robust laws and a highly skilled employment base. This is why only rich and developed nations are capable of reaping the benefits of the technological revolution. And from this point of view, Greece’s latest moves are impressive. Of course, Greece’s membership in the European Union also helps, providing the country with frictionless access to the continent’s single market.

Business-minded government

The role of Greece’s government to attract investments is pivotal. Alexandra Sdoukou, secretary general for energy and mineral resources at Greece’s ministry of the environment and energy (Ypen), told pv magazine that its task is to make the best policies and set up the fittest regulatory frameworks to provide investors with confidence to invest their capital in Greece. Sdoukou argues that the overarching policy that shows Greece’s travel of energy direction is phasing out coal from its energy system.

Greece had initially set 2028 as the latest date for phasing out its lignite power fleet, but PPC, which owns the country’s coal plants, recently said it would be able to close down or convert to gas its last lignite power station by 2025.

“Phasing out coal is an ambitious, complex and demanding project that will affect the economy of the coal regions and the livelihood of the local communities. So the government is working to establish a new economic model for Greece’s two coal regions, aiming for a just transition that facilitates new jobs and retraining workers to acquire new skills,” said Sdoukou.

This is why the task of phasing out coal does not concern an institution or a ministry alone, but the whole of the government and its institutions, added Greece’s secretary general for energy. With this in mind, Sdoukou explained that Greece set up a phase-out coal committee that is chaired by the energy minister, but comprises several other ministers and government figures. Moreover, the government has established a management team, which is responsible for the daily management of Greece’s coal phase out effort.

In fact, last year Greece published a post-lignite master plan, focusing on new economic activities in the mining regions in the following five pillars: renewable energy, commerce, industry, smart agriculture, and eco-tourism, along with technology and education.

It’s the reforms, stupid

Yet, investments do not come out of the blue, argued Sdoukou. “Investors need to see clear policy frameworks that allow them to work in a speedy and transparent manner. This is why my team reformed Greece’s renewable energy licensing last year, establishing a new digital licensing process that reduces the time required for the issuance of the first license of a power plant down to just 30 days. The second wave of the reform is now under way, which upon completion in the summer will allow investors to undertake the complete licensing of their project in maximum two years, down from seven years time that is needed today.” The upcoming reform will gather all necessary licenses and issuing institutions under the same online roof, the so-called ‘one-stop shop.’

Sdoukou also referred to Greece’s energy storage policy framework, which is now under way with the goal to make it a law in the third quarter of this year. Similarly, Greece acquired its first ever eco-mobility policy framework last year, with the government devoting a €100 million subsidy package towards the purchase of electric vehicles.

Greece seems to be in a period of frantic policy reform activity aiming to attract investments in all clean energy sectors, while making the best use of its chunk of the EU’s post-Covid recovery fund. But Sdoukou said that Greece needs a clear mandate from its prime minister to attract foreign investment, and should do so by establishing robust policy frameworks and using the EU’s recovery funds. He noted that the Greek Covid recovery plan comprises about €54.5 billion. The aim is to steer private capital toward the Greek energy transition effort.

For example, the energy ministry was able to allocate €450 million from Greece’s recovery fund to support specific storage projects. The projects will be announced following the publication of an energy storage framework. Similarly, the country has secured another €450 million of the recovery fund toward electric mobility, with €80 million to be spent on the development of a charging network in Greece.

The RWE spokesperson told pv magazine: “We see Greece as a promising market for our further growth in renewable energy. Greece offers good conditions – especially for solar – and is clearly committed to renewable energy to facilitate the transformation of the country’s power market.”