UPDATE: Minutes after this article went out in our newsletter, the Greek government announced it was paralysing the privatisation of the energy sector. Whether, or how, Syriza will support renewables, and potentially energy storage, is still unclear.
A focus on residential and commercial energy storage could offer Greece’s newly elected parliament a way to fulfil some of its well-nigh impossible election pledges.
The far-left Syriza party, which won national elections on Sunday, has promised to provide free electricity for 300,000 households and further stimulate the development of renewable energy.
But the administration’s capacity to deliver on that and a number of other election promises is being questioned because of Greece’s huge debt.
Yanis Varoufakis, the new finance minister, calls it the “largest loan in human history” and admitted his party’s win was a “poisoned chalice” on UK’s BBC Radio 4 on Monday.
Syriza won the elections with a programme that includes clamping down on corruption and renegotiating with Europe a “rational plan for debt restructure” by binding repayments to growth.
But Syriza’s hard-line stance on debt repayment has spooked many observers into wondering whether the election result will lead to a Greek exit from the European Union.
A gargantuan task
One thing is certain: the new administration faces a gargantuan task, and not least when it comes to energy policy. If Syriza is to live up to its election promises, both at home and abroad, then it needs to start delivering economic growth, fast.
Cheap energy would help, but in 2013, the last year for which data is available, Greece had to import more than 136 billion cubic feet of natural gas. The country has its own reserves of lignite, yet imported 255,000 tons of coal in 2012.
According to the International Energy Agency (IEA), between 1990 and 2008: “Domestic sources, primarily lignite but also renewable energy, covered a third of Greeces energy needs, and the entire indigenous production.
“The remaining two-thirds of TPES [total primary energy supply] were oil and natural gas which are almost 100% imported.”
One source of energy that Greece does not have to import, however, is sunlight. Almost all of the country gets at least 1,500 kilowatt-hours per square metre of sunshine a year.
Attempts to capture this potential led to a mini-boom in solar PV installations a couple of years back. The country installed more than 1GW of PV in 2013, before lawmakers pulled the plug on incentives.
PV “pretty much dead”
Feed-in tariff cuts and retroactive levies stopped the solar industry in its tracks during 2013, and very little has been installed since. For the last year the PV sector in Greece has been “pretty much dead,” according to IHS solar power analyst Josefin Berg.
“By September 2014 almost nothing had been installed,” she says.
Berg doubts that reinvigorating the solar sector will be a near-term priority and, indeed, there are reports that Syriza is mulling the construction of new lignite plants to exploit native reserves.
However, such projects could be politically sensitive for Syriza, which is an alliance partner of the Greek Green party. Furthermore, it very much remains to be seen where the money might come from for any big energy infrastructure projects.
Syriza’s stated commitment is to improve living conditions for Greek citizens, which means splashing out on welfare.
Plus any backtracking on European debt obligations is unlikely to make it any easier to access funding, either from Europe or from the private sector.
In contrast, and always assuming a non-catastrophic outcome to European debt talks of course, it would seem like solar-powered micro-grids could be a good idea for providing energy in remote areas, and particularly on Greece’s numerous islands.
A government investment programme on this front seems unlikely, and even a re-introduction of feed-in tariffs could be tricky given Greece’s financial position. However, they may not be needed.
According to Deutsche Bank, solar is now competitive without subsidies in the Greek residential and industrial markets, and has been for at least a year.
In fact, in 2014 the gap between the levelised cost of energy for solar and the average cost of residential electricity was one of the largest in the world, at USD$0.15 per kilowatt-hour.
Such a differential could put distributed solar back on the energy menu for Greece.
And it could even allow for battery storage to be added into the equation, particularly if the government can muster modest fiscal incentives, such as tax breaks or credit facilities, which might fit in with its plans for fostering economic growth.
There are other, bigger challenges facing the Greek energy sector, of course. Electricity market reform is one of the points that Europe has been insisting on as part of debt repayment plans.
Throwing energy markets open
That remains unfinished business, and it will be interesting to see left-leaning Syriza’s attitude towards throwing its energy markets open to the private sector. Greece is also central to plans for a European gas pipeline from Israel.
Again, such a project might clash with Syriza’s ecological sensitivities, although in the current climate it could also serve as a valuable bargaining chip.
If Syriza can weather the storm it has inherited, however, it is difficult to see solar-plus-storage not eventually becoming a bigger part of the Greek energy mix. The combination makes too much sense to be ignored.
As the IEA observed in its 2011 report on the country: “Energy policy in Greece has the potential to make a significant contribution to the country’s economic recovery.
“Increasing competition and reducing the role of the State in the energy sector should add efficiency and dynamism to the Greek economy. This, in turn, should generate self-sustained employment and prosperity for the country.”
None of that has changed with Syriza’s arrival. If anything, the IEA’s words are more prescient now than when they were written.
The only difference is that distributed solar power and energy storage are now available as an option… without the need for handouts.
Written by Jason Deign
- Residential energy storage will be one of the many topics featured in this year’s Energy Storage Europe in Düsseldorf. Book before January 31 for your early-bird discount.