ECONOMY

Deregulation opens road for investments of 4.5 bln euros

The deregulation of Greece’s energy market is expected to draw projects worth 4.5 billion euros with high investment activity also expected in the region of Southeast Europe, Deputy Development Minister Anastassios Nerantzis told Kathimerini English Edition in an interview. Greece has been slow in liberalizing its power market, trailing many of its EU peers. However, recently approved legislation aims to promote investments in the sector by cutting permit procedures and alleviating bureaucratic bottlenecks. Changes in the industry are also expected to help create more than 40,000 jobs, according to Nerantzis. Growth in renewable energy sources (RES) is showing the strongest performance, particularly in wind energy, which has expanded by 60 percent, the deputy minister added. Development of wind energy in Greece has drawn investment projects that rank among the largest in the world, with the focus being on islands that offer consistent and year-round windy conditions. The government is also taking steps to better protect the national electrical power system from the threat of blackouts, especially during the hotter summer months, by upping its capacity with new power stations and hooking up to the energy grids of neighboring countries. Nerantzis said that a line with Turkey is to be completed in 2007, while Greece is also planning a second underwater power line with Italy. The deregulation of the electrical energy market in Greece trails progress made in many other countries in Europe. What steps has the government moved ahead with recently to help harmonize Greece with its European partners? The government (which took office in March 2004) has directly met the deregulation of the electricity market as part of its national strategy on the power sector. We launched exhaustive talks and covered a 10-year gap. In the one-and-a-half years since we took office, we submitted and passed in Parliament legislation that harmonized Greece with the rest of the EU. Among the steps being applied is the complete liberalization of the electrical energy market, where all consumers will be able to choose their electricity supplier from July 1, 2007. Also we have separated DESMIE (Hellenic Transmission System Operator) from the Public Power Corporation regarding the maintenance, operation and development of the power network and have set a December 31, 2010 deadline for the induction of new power plants that will be chosen by a DESMIE tender. The government is promoting reforms in different sectors, including energy. What changes can we expect to take place in the electrical energy market in the medium term? The deregulation of the electricity and natural gas markets, the promotion of RES and investments in infrastructure and network expansion will radically transform the country’s energy landscape. The entry of private investors into the energy market will create competitive conditions with many benefits for consumers. Growth of RES has resulted in capacity today approaching 1,000 megawatts from 350 MW in 2004 and will also create more than 40,000 jobs. Technology to save energy and boost performance will reduce the cost of energy for consumers and will also contribute to the economy by reducing waste and improving energy intensity. What investments do you see deregulation bringing to the market? Investments in RES and electricity production are estimated to exceed 2.5 billion euros, while domestic investment in electric, natural gas and petrol are estimated to exceed 4.5 billion euros. Additionally, investments in Southeastern European countries are expected to reach more than 21 billion euros. According to EU guidelines, all Greek electrical energy consumers will have the right to choose their supplier by July 2007. Do you believe that the domestic market will be ready by that date? We are working continually on our programs and updating our activities in this direction in order to achieve our goal. A study by consultants Capgemini showed that electricity demand in Europe is increasing more than investments in the sector and named Greece as having been among the countries with the lowest spare capacity. How do you see strong demand in the domestic market being met in the immediate future? The system this year coped with demand, particularly during peak hours, for power that approached 10,000 MW. This was not on just one occasion. The introduction of two power plants in 2005, the recent operation of a unit in Lavrion along with the program to offset reactive loads (that equates to a 450 MW power station) have performed efficiently to strengthen the system. On the other hand, connections with neighboring countries are proceeding quickly. We are completing a second line toward the Former Yugoslav Republic of Macedonia (FYROM) and in 2007 we will complete a connection to Turkey. We are also planning a second underwater line with Italy. These steps, in combination with energy saving measures at electricity production units, are boosting the system until the completion of new plants. At the same time, the contribution of RES, mainly from wind parks, is increasing every day. Within this framework and based on arrangements to boost the system by 2015 with new units, we consider that there will not be a problem.