IEA commends Greek energy policy for supporting regional energy links, but outlines domestic challenges on market reform

(Athens) — 29 November 2006

“Greece is actively contributing to the creation of new and important energy links in south-east Europe and across the Mediterranean, and this is a commendable development”, said Claude Mandil, Executive Director of the International Energy Agency (IEA), today in Athens at the launch of Energy Policies of IEA Countries – Greece 2006 Review. “At the same time, the Greek government should take care to continue with the introduction of real competition in its domestic gas and electricity markets, to ensure that Greek consumers benefit from increased market liberalisation”, Mr. Mandil stressed and added: “Creating fully independent system operators and strong measures to reduce the market power of the incumbents will be required to lead to a successful opening of Greek gas and electricity markets.”

Energy infrastructure improvements such as new transmission lines are required in Greece, and these present a major challenge for the Greek government because of the need to overcome the strong local resistance to them. “Without this new infrastructure, important projects such as the introduction of renewables, and the reinforcement of the connection between northern and central Greece are threatened, with possible consequences for Greek security of supply”, Mr. Mandil said. Increasing renewable energy production would help diversify the national energy system and reduce import dependence, while increased transmission capacity between northern and southern Greece would strengthen the reliability of the electricity system.

Greece to reposition itself as a major energy hub between East and West
The government is pursuing an active policy of increasing energy transfer through Greece and the international interconnections of the country. Projects such as the Burgas-Alexandropoulis oil pipeline and the proposed Turkey-Greece-Italy gas interconnector will increase security of supply in the region and beyond. The IEA welcomes the effort of the Greek government to support these projects and the regional integration through the South-East European Energy Community, of which it is a key founding member.

Domestic market liberalisation is a major challenge for the Greek government
Unless further measures for market liberalisation are taken, effective competition is not conceivable in Greece, and the benefits for the consumers from the legal opening of the gas and electricity markets will be significantly diminished. Measures such as the first tender for a private power plant, and the full privatisation of the Public Gas Corporation of Greece (DEPA) are welcome, but will not suffice to
achieve the goal of effective competition. Full independence of the system operators and the new regional gas suppliers, and strong regulation of the incumbents are further measures that the government could consider.

Strong resistance to energy projects is a major hurdle for the development of the energy system
To increase the resilience of the electricity system following the 2004 blackout, the Greek government has made progress in implementing a range of measures that have been successful in preventing a repetition of this event. Further improvements are now required for the future development of the country’s energy system, but these are difficult to achieve due to a high level of local resistance and administrative barriers. The Greek government should consider doing more to communicate its energy policy, policy goals and constraints to the general public to help them understand the true costs of energy, along with the benefits.

Greece has made significant progress in energy policy over the last two years
“The Greek government has achieved much during the last two years of which it can be proud”, Mr. Mandil concluded. “Therefore, despite the challenges outlined above, the IEA is pleased to see the significant progress made in the country’s energy policy in the past two years, and is hopeful that Greece will continue on this reform path.”

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