Greek isles to be connected to grid

The Cyclades, the sun-washed complex of Greek islands defined by its white and blue houses, attract millions of tourists each year.

What most visitors ignore, is that powering idyllic islands requires dirty diesel generators but that will cease being the case from 2016.

ADMIE, Greece‘s independent power transmission operator (ITSO), on Wednesday signed contracts with Greek and international companies to connect the islands of Mykonos, Paros, Tinos and Syros with Greece’s mainland grid.

The project, which will use submarine cables, has a €240 million budget, provided by the EU‘s National Strategic Reference Framework funds and the European Investment Bank.

Submarine cables project

France’s Alstom Grid S.p.A., the Swedish branch of ABB AB, Italy’s Prysmian Powerlink Srl and Greece’s Electric Cables S.A will undertake construction of the underground and submarine electricity lines with Prysmian building the 108km long underground and submarine 150kV cable connecting Lavrion and the island of Syros.

Greek Cables will connect Syros to Mykonos, Tinos and Paros as well as providing a terminal at Syros.

Alstom will construct 150kV substations at Lavrion, Mykonos, Syros and Paros and ABB AB will build a reactive power complex at Syros.

All four project components have 18-22 months to complete the first phase of the project. Additional contracts concerning the interconnection of Naxos island, also in the Cyclades group, to the mainland grid will be signed later.

Why the project matters

Speaking at Wednesday’s signing ceremony, Greece’s deputy energy minister Asimakis Papageorgiou, justified the necessity of the project in economic, environmental and energy security terms.

Papageorgiou said the interconnection of the four islands to the grid will facilitate the deployment of renewable energy projects in the islands. Investors have been expressing interest in developing renewable energy projects in the sun-washed and windy islands region of Greece, but a lack of grid infrastructure means projects have not materialised.

Perhaps most significant of all, given Greece’s economic situation, is the fact the project will bear huge financial savings. Electricity consumers in Greece are expected to save about €100 million per year, money used to subsidise diesel generation in the islands.

The cost of electrifying Greece’s islands through petroleum power stations is shared by all Greeks through a levy in electricity bills. Following the interconnection of the Cyclades to the mainland, these stations, Papageorgiou said, will remain in reserve for emergencies.

Tourism will benefit too, the deputy minister said. Connecting Mykonos, Paros, Tinos and Syros to the grid means securing their electricity supply and eliminating the risk of blackouts.

Greece’s next big plan is to connect Crete with the grid, Papageorgiou said. Crete’s connection would save consumers an additional €400 million per year, he said.

Cynics, however, may note the ministry took 20 years of discussions regarding the Cyclades interconnection project prior to this week’s contract signing.

Greece has also received EU funds to study the electricity interconnection of the country with Cyprus and Israel, using submarine cables. The goal is to enhance the country’s energy security, increase the number of electricity markets in which it participates and eventually emerge as an energy hub for the southeastern Mediterranean.

ADMIE for sale

In July, the government’s Public Power Corporation (PPC) approved the participation of four investors/partnerships in a bidding process for the acquisition of 66% of Power transmission operator ADMIE.

Investors will need to submit final bids by November, while ADMIE’s privatization is expected to be complete early next year.

The bidders include a partnership between Belgium’s Elia System Operator S.A. and the IFM Investors Pty Ltd; Canada’s Public Sector Pension Investment Board; China‘s State Grid International Development Limited; and Terna, Italy’s leading electricity grid operator.

The Greek government is keen to privatize key electricity industry assets including large PPC-owned power stations.

Greece’s electricity industry is changing rapidly with the government arguing it is trying to align policies with the rest of the EU by creating market-based conditions and fair competition.

The renewable energy lobby is pushing for the role of renewable plants to be upgraded in the new landscape and demanding transparent market conditions.