A key energy issue that has been delayed for months is moving into its final stages under pressure from recent developments. The longer it takes to get under way, the more it will weaken the stability of the power system, eroding the benefits of the country’s progress in renewables.
According to sources, priority lists for standalone and merchant batteries are expected to be published in the coming days (without subsidies). They will set the order in which the projects in the running are connected, and the relevant recommendation has been on the Environment and Energy Minister’s desk for days.
The market is eagerly awaiting the ministerial decision, as it will clarify which projects will be given priority for Final Connection Offers — in other words, which will be first to enter the storage market and thus capture the most profits, giving a major boost to a sector in which Greece remains a laggard.
About 720 applications, with a combined capacity of 9 gigawatts, have passed the completeness check. Projects totalling up to 3.8 GW will secure connections to the transmission system, while 900 MW will connect to the distribution grid.
Potentially, this represents cumulative investment of close to €2bn.
Even if only some of them are built — banks are applying strict criteria, since merchant battery revenues are not guaranteed and depend on wholesale price fluctuations — it would still mark the launch of the largest wave of investment in storage ever undertaken in Greece.
If delivered without distortions, this surge of projects could bring 3-4 GW of storage into operation by the end of 2028, the Environment and Energy Ministry’s target.
Past fixations
Today, following the commissioning of the Metlen-Karatzis battery, the country has a battery fleet that does not exceed 1 GW and remains near the bottom of the European rankings, paying the price for past fixations and missteps.This is mainly because, when batteries were being discussed two or three years ago, some in the government argued that they were still too expensive. There were also estimates that the impact of natural gas prices would be smaller.
The latter assumption in particular proved unrealistic, as the current energy “polycrisis” shows, forcing the government to accelerate its policies.
It is telling that, while the Prime Minister said at the inauguration of the battery in Larissa the day before yesterday that by 2028 Greece should have 3-4 GW of batteries in operation or under construction, he also defended earlier government decisions, implying that cost had been an issue.
“Obviously, batteries are not a panacea if there is no surplus generation. But they are certainly a technology that will continue to evolve and become steadily cheaper,” he said.
Objections, the process and next steps
That is where the battery issue stands today, with the ministerial decision on the lists expected within days.
Although objections are certain to follow, publishing the priorities for each project would in any case mark a decisive step towards clearing the way for connection offers from IPTO and HEDNO.
Once the connection terms are offered, the ball will be in the investors’ court. They will have two months to decide whether to accept them.
If they withdraw, their “hefty” bank guarantee will be returned. If they accept the connection terms, they must lodge a new, equally “hefty” guarantee, which will be forfeited if they fail to complete the project within 18 months.
The real contest begins when they receive the connection terms offer: within the two-month deadline, they must secure financing for the project.
Banks
Another challenge is how the banks will respond. The major players have credit lines in place and are not concerned about financing.
Everyone else will have to meet the increasingly stringent screening criteria set by banks, which are being asked to lend at scale to a new “green” technology for which there is no visibility at all on future revenues from wholesale markets.
In this new reality, the amount of financing available depends not only on the creditworthiness and track record of the investor, whether small, medium-sized or large, but on a range of factors.
From any guaranteed revenues an investor can demonstrate, the type of equipment and maintenance throughout the battery’s lifecycle, to the aggregator they work with and the system-stability services provided, all now feed into banks’ financing calculations.