More energy storage will ease solar PV curtailment problems in Greece

“Market risk was limited thanks to the feed-in tariff (FiT) and feed-in premium (FiP) models, which guaranteed compensation for (all) energy produced. This has been changed. The route to market is currently through cPPAs (corporate power purchase agreements) and resellers. This means additional risk for the investor, adds Kapellos.

National renewable energy support programmes such as FiT and FiP are the main drivers of the solar energy market in the country, “combined with falling prices for photovoltaic modules,” according to Ulrich Laumanns, project manager at Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).

Laumanns adds that while most of Greece’s installed solar capacity comes from auctions organized by the Energy Regulatory Authority, the impact of self-consumption programs has been “relatively small.”

When it comes to the state of the Power Purchase Agreement (PPA) market and its key drivers, Evangelos Gazis, Head of South Eastern Europe at Aurora Energy Research, says that “traditional CfD auctions are highly competitive, resulting in low prices, while industrial buyers’ higher willingness to pay due to price volatility is driving interest in PPAs across the region.”

In some cases, such as Greece, PPAs have allowed for a faster grid application process, which has “overheated the market,” Gazis explains, adding that lenders are still reluctant to finance projects that are fully commercial in nature and require some form of long-term revenue stability.

Increased level of restrictions

One ongoing challenge that has intensified this year is the issue of constraints, which both Gazis and Kapellos have highlighted.

“Reductions in 2023 are estimated at 2-3% of total renewables production and are expected to increase this year due to additional renewable energy sources (2.5 GW expected in 2024 compared to 2.5 GW in 2024). 1 GW in 2023),” explains Kapellos. As the share of renewable energy in the energy mix increases, renewable energy cuts in 2024 – in the first four months – have already exceeded 2023 numbers, as mentioned in one of the cover stories Technical power PV 39.

Energy storage could be a solution to reducing the constraints, Kapellos explains, although investing in this technology will still take several years.

“Energy storage will at least partially solve the problem of constraints. There is a lack of energy storage on the market, and 2 BESS auctions (~1 GW) to support it (RRF) have already been held. Energy storage is in short supply, and new investments are heading in this direction over the next two to three years. Further penetration of energy storage would reduce constraints and even make room for more electrical space (connection conditions) in specific locations in the country.”

Limited network capacity

Supply constraints are not only one of the biggest challenges in Greece, but in all of Southern Europe, Gazis explains. He also highlights the risk of price cannibalization and the “slow process of getting connected to the grid” as the biggest challenges for the photovoltaic industry in the region.

Laumanns also raises the issue of the state of the network in the country. The limited capacity of power grids to absorb new renewable energy is the biggest challenge, adds Laumanns. “This requires extensive reinforcements of the existing network, as well as the large-scale implementation of energy storage systems.”

Faster deployment and increased support for energy storage could alleviate congestion issues while helping to strengthen the grid in Greece.

“Greece needs to strengthen its electricity grids, including connections with other countries. Investments in energy storage and sector coupling (use of renewable energy, e.g. in electric vehicles, heat pumps, electrolysers) should also be supported,” Laumanns added.

Streamline your licensing process

In terms of policy changes to further support solar PV development in the region, Gazis says: “(A) streamlined licensing process, greater clarity on static caps (injection caps), clarity on potential caps and rewards for dynamic emission caps,” as well as “clarity in the regulatory framework and potential support for battery storage to enable broader solar deployment.”

New technologies (agriPV, FPV and green hydrogen)

The implementation of new technologies in Greece is ongoing, but at varying rates. Laumanns explains that the Greek government has announced a support program for floating solar pilot projects.

“There is significant potential for green hydrogen in Greece and some projects are already being implemented with EU financial support. A national support program for green hydrogen pilot projects is currently being prepared. However, there is still no dedicated legal framework for all these technologies,” adds Laumanns.

The impact of green hydrogen on solar photovoltaics is undeniable and could bring between 24 GW and 34 GW of installed capacity just to generate electricity to power these electrolysers. This was highlighted in a guest blog published earlier today by Panos Kefalas, Principal Research Expert for Southeast Europe at Aurora Energy Research, who wrote about the potential impact of green hydrogen on solar photovoltaics in Southeast Europe.