The Greek electricity system evolution & the electricity highway to Central Europe

The EU Regulation on Trans-European Energy Networks (TEN-E) that was entered into force in 2013 and was revised in 2022 set down rules for the timely growth and interoperability of trans-European energy networks and assists towards achieving the EU's energy policy objectives. More specifically, ensures the operation of the internal energy market towards price convergence across the EU, improves the security of supply, accelerates the development of renewable energy projects as well as promotes energy saving, energy efficiency and the interconnection of energy networks.

In the above framework, scheduled and new cross-border interconnection lines between EU countries (also called “electricity highways”) lie among the most promising and feasible options to address the upgraded 2030 energy and climate targets and the 2050 climate neutrality objective. Their purpose is to transfer high amounts of electricity generated from RES plants and promote EU electricity market integration.

The recent study of KPMG Greece, in collaboration with the Aristotle University of Thessaloniki, “The Greek electricity system evolution & the electricity highway to Central Europe”:

• Investigates the long-term benefits arising from the construction and operation of an electricity highway between Greece and Germany – using the "South East-North Electricity Highway" (SENEH) for the quantification of results, with a capacity of 9GW.
• Analyzes, through 3 distinct scenarios of the Greek electricity system evolution, the hourly prices of the day-ahead market, the hourly costs of uplift accounts as well as the need for external financial support mechanisms for the new gas CCGTs and storage capacities (i.e. batteries).
• Analyzes the energy balance and captures the annual cross-border trading volumes arising in each of the scenarios.
• Assesses the total purchasing cost of electricity from suppliers (and by extension end consumers) considering both wholesale costs and long-term bilateral contracts (PPAs).
• Estimates the national surplus created from to the increased export activity as a result of such an interconnection.

Key points:

• From a system operation point of view, the introduction of the new interconnector is going to allow for much higher RES shares in Greece, contribute to increased security of supply and enhance system stability and flexibility.
• From the economic valuation point of view, the operation of such an Electricity Highway is going to primarily eliminate the need for establishing external financial support schemes tailored for new market entities, making new CCGTs and battery storage technologies commercially viable. Additionally, the study reveals that the combination of this interconnection with storage capacities and increased RES penetration maximizes the total value for both consumers and the national economy.   
• In return, the interconnection significantly reduces the long-term electricity cost for the end-consumers. More specifically, during the horizon 2026 to 2055, a decrease of -4,9% to -13,3% (depending on the scenario) is estimated compared to the baseline scenario.
• In addition to the notable end-consumer surplus, the new interconnection is projected to provide additional surplus of up to € 8,1 billion for the national economy, in net present value terms. 
• The total value that is created for the Greek economy (taking into consideration both the price reduction for consumers as well as the national surplus due to increased exports) is estimated to up to € 17,5 billion, indicating that the added value that this project is going to bring for the Greek economy as a whole exceeds the initial capital expenditure that is needed for its realization.
• Finally, the significant increase in the exported energy from Greece to central Europe not only assists towards the reduction of electricity prices in other European countries as well, but also supports the integration of the markets.