The burning issue of fast track licensing, something that is currently absent, together of course with bank financing and the presence of serious investors with an understanding of the risk they are taking on, will determine the bet of battery penetration in Greece.
At a time when batteries are at the center of criticism, with the country trailing neighboring Bulgaria (6 GW) and the government setting the ambitious target that today’s 700 MW should have increased tenfold by 2029, reaching 7 GW, the market is asking for fast track licensing in practice, not in words.
X-raying the message sent by the attending executives of energy groups and banks at a closed meeting of Jinko Solar, the Chinese giant manufacturer of equipment for photovoltaics and batteries, everyone agrees that the real problem for batteries to get moving in Greece is bureaucracy and political decisions.
The country’s major lag across Europe and especially the imbalance between requests and actual projects is also confirmed by the Eurelectric barometer published yesterday.
Although Greece holds 6th place across Europe in terms of the battery project pipeline, it nevertheless ranks last with the smallest installed capacity.
Specifically, the plans that have applied for licensing in Greece amount to 27 GW, but installed capacity is only 0.7 GW.
Although Germany (480 GW), Italy (277 GW), Poland (83 GW), the Netherlands (60 GW) and Spain (37 GW) have an even larger pipeline, all of them have proportionally more batteries in operation.
Banks are called upon to play a central role in the undertaking, as while until recently they were cautious toward merchant batteries - those that participate in the wholesale market and operate on purely commercial terms, without subsidy - they now appear much more willing to finance them.
Provided that the investor also takes the right steps and is in a position to understand the risk they are taking on, something that is not self-evident.
This means that the financing structure should reduce the risk from the battery’s participation in the market and the complete lack of visibility for its future revenues, which are no longer guaranteed.
Unlike traditional “green” projects with guaranteed revenue for 20 years, where the loan usually covered 80% of capital expenditures and the remaining 20% came from equity, banks are now called upon to assess investments with no safeguards whatsoever.
Given this, the ratio changes and the loan usually does not exceed 50%-60% of the investment, therefore equity participation moves at 40%-50%, a model completely different from the one on which bank financing of RES in Greece was built for decades.
The new banking filters
In this new reality, of financing projects without "locked-in" financial inflows, whose loan repayment depends exclusively on the conditions that will prevail in the wholesale markets in the coming years, banking tools vary.
“Of course a merchant battery will be financed differently compared to a subsidized energy project. But we have the tools to mitigate the risk and together with investors we find the structure and the appropriate balance between risk and return. We have done this with many of our clients”, as stated by Alexandros Panagiotakis, Head of Project Finance at Piraeus Bank.
“In other words, if the investor is reliable, then leverage will be lower because the risk is higher and may range, for example, at 50-60% of the investment. But their returns are also higher in the scenario where payback takes place within 3 years. Therefore, if they secure their revenues and cash flows, then the percentage can reach 70% as well, again depending on the investor. There is not only one solution”, added on his part Sotiris Kapellos, CEO at HELLENiQ RENEWABLES.
In the case of merchant batteries, banks are now applying a series of filters, not only the investor’s track record, but new criteria: from the services the battery provides to the market, to the type of equipment and the Aggregated Representation Entity (FoSE) with which the borrower cooperates, that is, the company that “runs” the project daily in the wholesale market.
Factors that do not have an easy answer also enter the equation, such as the phenomenon of “cannibalization”. Because the more batteries are installed in the electricity system, the more the price difference between midday and the afternoon is reduced. This means that profit margins for each new storage unit are also gradually reduced, consequently the investments themselves may in the medium term have noticeably less revenue than in their first years of operation. This is an exercise that can hardly be modeled accurately even for a 10-year horizon.
In any case, the more viable battery projects are financed, the faster the risk of creating a new generation of “red” loans in photovoltaics will also be curbed, an issue about which more and more people in the sector are sounding alarm bells, such as the head of Metlen, Evangelos Mytilineos.
In the coming weeks Metlen together with the Karatzis group are inaugurating the largest standalone battery in Greece (with Jinko Solar equipment) and one of the largest of its kind in Europe, with a capacity of 330 MW (790 MWh) in the wider area of the Municipality of Kileler - Nikaia of Larissa.
The 7 GW target and speed in licensing
In any case, as regards the main factor for winning the battery bet in Greece, namely rapid licensing, the market remains cautious, with some considering the target unrealistic.
According to the targets of the Ministry of Environment and Energy, by the end of 2026 batteries will have reached 1 GW, by mid-2027 they are expected to have increased to 1.5 GW, to reach 3-4 GW by the end of 2028 and 5-7 GW in 2030.
“The bet will depend on the speed of issuance of connection terms by ADMIE, the reduction of bureaucracy and of course on political decisions, something we have not seen so far. If, for example, the government had moved faster over the last 2 years, today we would not need to throw 1.5 Terawatt-hours of green energy in the trash, nor would we have negative prices of such magnitude”, according to the energy advisor of the Association of Photovoltaic Companies, Stelios Psomas.
As for the question of how neighboring Bulgaria managed it so much better than us, the answer comes from Dimitris Varlamis, Sales Director of JinkoSolar in Southeastern Europe, with the group having contracted batteries with production of 1.8 GWh on behalf of its clients in Greece.
“We were excessively delayed and although we started first, Bulgaria saw the window of opportunity in time. It exploited it and over the last 2-3 years poured much more money from the Recovery Fund into storage compared to us, now becoming an international case study. And here it is not only the capital that matters, but also the equipment delivery times”, he said characteristically.
Then, its regulatory framework is extremely simple, according to Mr. Kapellos. It simply opened the door to investors, unlike the Greek framework, which is overregulated and strict.
In this new reality, an interesting element is also that suppliers are no longer content, as in the past, with providing only the equipment, but now offer a comprehensive service, assisting the investor at all stages: From installation, to connection, operation (battery as a service) and after sales service. At the same time, equipment companies are now investing increasingly significant amounts over a long-term horizon as well, a sign that they believe in the future of the market.
Among Jinko ESS projects already operating in Greece, the large-scale battery with a capacity of 123.8 MWh at “Eleftherios Venizelos” stands out, with the company estimating that by mid-2027, its installed capacity in the country will have reached 1.5 GW.