By Fitch Solutions

Key View

  • We forecast consistent growth in Greece’s non-hydropower renewables segment with risks to solar capacity growth abating.
  • Greater government support for the sector underpins our positive outlook for Greek solar, with supportive policies announced creating upside risks to forecast.
  • Solar will continue to offer increasing opportunities for both foreign and domestic developers.

We expect to see consistent growth in Greece’s non-hydropower renewables segment, with risks to solar capacity growth abating. Large scale reductions in thermal capacity will continue to drive the need for rapid expansion of the renewables sector. We now expect 5.5GW of net non-hydro renewables capacity to come online between 2021 and 2030 with the majority, 3.4GW, being in the solar sector. This will see its share of total generation in the market to rise steadily and its growth continues over the decade at an average annual rate of 6.7%, rising from 24% at the end of 2020 to just under 40% by 2030. Our previous assessment that near-term risks for the Greek solar sector over feed-in tariff (FiT) payments would subdue investor confidence has abated. Instead, we expect to see our major trends play out with large scale support being given to the solar industry at a governmental and commercial level.

Share Of Non Hydropower Renewables To Grow Steadily Over Decade
Greece – Share Of Total Generation, %
e/f = Fitch Solutions estimate/forecast. Source: EIA, Word Bank, IRENA, Fitch Solutions

Greater government support for the sector underpins our positive outlook for Greek solar, with supportive policies announced creating upside risk to our forecasts. We highlight that Greece’s largest utility, majority state-owned Public Power Corporation (PPC), has outlined a spending plan of USD4.1bn to develop renewable capacity and modernise the country’s distribution grid. Approximately 42% of the funds will be aimed at upgrading its 242Km grid network to incorporate more renewables capacity. PPC has also highlighted that the funds will also be used to build out an additional 1.3GW of renewables capacity by 2023 from its 0.2GW of currently installed capacity, presenting upside risks to our forecasts. The Interministerial Committee of Strategic Investments has also sought to accelerate the licencing procedure for major renewables projects with a core focus on the solar sector. This strategy has supported companies that are developing renewable projects amounting to EUR2.02bn and an estimated capacity of 2.81GW. Such support has had a positive impact on the rate in which projects are realised and led to a number of developers submitting further applications. The government has also increased the solar and wind capacity growth tenders. The new round of auctions will take place in Q221 and feature 450MW of capacity while the overall tender scheme will rise to 2.1GW by 2024.

Solar Growth To Lead Renewables Capacity Growth
Wind and Solar Capacity Growth, Share of Renewables Capacity & y-o-y growth rate, %
e/f = Fitch Solutions estimate/forecast. Source: EIA, Word Bank, IRENA, Fitch Solutions

We highlight that solar will continue to offer increasing opportunities for both foreign and domestic developers. The Greek regulatory agency had launched a coal power site to renewables conversion initiative utilising grid access and site infrastructure. So far, the regulators have issued generation certificates for 1.9GW in solar capacity. Domestic and foreign investors are flocking to Greek solar market, seeking low cost projects while the sector sees the adoption of new solar technologies. This is seen in the market’s strengthening project pipeline, in spite of the aforementioned feed in tariff payment concerns, demonstrate the confidence in the sector. This is further supported by the progress of several ongoing solar developments:

  • PPC Renewables has awarded a contract to Metka for the construction of the third phase of the 230MW Kozani solar photovoltaic (PV) solar complex in Western Macedonia, Greece. The 200MW third phase will require an investment of EUR110.0mn (USD134.9mn). The first two lots of the EUR130.0mn (USD159.7mn) complex are under construction. The third phase, which will use bifacial PV panels, will be financed by a local lending consortium. Construction is scheduled to begin in March 2021. We also highlight the advent of new solar technologies in the Greek market, namely the floating solar sub sector. Terna Energy has submitted applications to the Regulatory Authority for Energy of Greece seeking permission to install 265MW of floating solar photovoltaic (PV) plants in artificial reservoirs in the country. The projects are estimated to cost more than EUR170.0mn (USD206.8mn). The projects include a 120MW floating PV plant in the Kastraki dam on the Achelous River in Aitoloakarnania, a 103MW array on the Pournari dam near Arta and a 42MW floating solar system in the artificial Army Reservoir. The three schemes are intended to increase the company’s installed capacity from 2.8GW to over 3GW in next five years.
  • We also highlight German renewable firm Juwi has started construction on a 204MW solar farm in Greece, according to a company press release. The EUR130mn (USD154.5mn) project, being built for Hellenic Petroleum Group, will feature bifacial photovoltaic modules and is coming up in the Kozani region of Western Macedonia. Bifacial solar projects enable greater efficiency of generation with less land usage owing to the production module operating on both sides of the panel. Power is therefore generated from the sun facing side and is able to capture irradiation reflected from the ground. The project, which will have annual output of 300GWh, is due to start operations at the end of 2021.

As such we expect to see 3.4GW of solar capacity come online, compared against 1.9GW for wind between 2021 and 2030. Furthermore, we expect cumulative solar capacity will overtake wind by 2025. The solar subsector is set to account for 62% of new renewables capacity additions between 2021 and 2030.

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This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 (‘FSG’). FSG is an affiliate of Fitch Ratings Inc. (‘Fitch Ratings’). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.