The main types of lenders under Greek law are credit institutions, which are regulated by the provisions of Greek Law No 4261/2014 and are authorised and supervised by the Bank of Greece. In addition, there are:
Sponsors vary – typically, in the energy and real estate finance sectors they operate in large corporate group structures providing equity injections or intra-group loans to subsidiaries or special purpose vehicles (SPVs), which undertake to carry out the energy or real estate project, as the case may be.
Public-private partnerships (PPPs) are contracts concluded between a private entity and the public sector to carry out a project or to provide services. The legal framework governing PPPs is Law No 3389/2005, as amended and in force.
There are four conceptual elements to a PPP under Law 3389/2005:
Nevertheless, Law 3389/2005 provides that, in exceptional cases, it is possible to subject partnerships to its provisions – even if one or more of the prerequisites in (b) to (d) above does not apply to the partnership in question – by virtue of a unanimous resolution of the Ιnterministerial Committee of PPPs.
A peculiarity of a PPP in relation to other contracts concluded between public and private entities is that the contracting authority of the public sector does not enter into a direct partnership with the selected contractor of the private sector, but with an SPV established by the contractor in the form of a société anonyme for the sole purpose and in the framework of the implementation of the PPP.
Benefits and advantages of the aforementioned include:
Broadly speaking, the main issues that have to be tackled when structuring the deal are as follows.
Assessment of the Risk of the Financing Under Deliberation, Taking into Account the Feasibility of the Project and the Trends of the Relevant Market
A carefully considered and detailed business plan with substantiated projections of the project’s cash flow, that enables the lender to complete its risk-assessment procedures, is of utmost importance. Also, legal due diligence of the project documents (licensing, agreements with major contractors, land rights, etc) is key for assessing any risk factors as regards completion and proper operation of the project. This will enable the lender to timely include in the finance documents of the transaction customised provisions (ie, undertakings and/or events of default clauses) that address any worrisome issues deriving from the conducted due diligence, in order to optimally secure the position of the lender and minimise its risk.
The Source of Funds and the Debt-to-Equity Ratio
As regards project equity (injected into the borrower in the form of share capital increase or by virtue of intra-group loans), the lender should ensure that the borrower demonstrates sufficient evidence proving that the sponsor(s) have the ability and funds available to finance the project, as well as the origin of such funds (“proof of funds”).
The Security Package in Relation to the Financing
The lender should ensure that the deal involves sufficient security which guarantees the full repayment of any debt arising from the financing under negotiation. The nature of the security to be provided varies depending on the type of financing. In project finance, it usually includes a pledge on all receivables deriving from the project documents as well as the creation of security interests on all assets of the borrower.
Provision of the Essential Financial Ratios That Must Be Maintained to Ensure Due Repayment of the Financing
Currently, the most commonly used and preferred method of financing in the Greek market is financing in the form of bond loans under Greek Law No 4548/2018 and Article 14 of Greek Law No 3156/2003. A major reason for this is that, compared to other common methods of financing – ie, term loans, credit through open (current) account agreements – under the legal framework for bond loans, registration fees (in relation to registration in the public books of the competent land registry and/or cadastre of mortgages/prenotations of mortgage over real estate, non-possessory pledges and floating charges over chattels) are fixed at EUR100 per registration, which minimises the costs of security granted under bond loans, given that in all other cases of financing registration fees are proportional to the secured amount (eg, registration fees for the land registry amount to 0.775% of the secured amount, whereas registration fees for the cadastre amount to 0.875% of the secured amount).
The renewable energy market in Greece has been rapidly developing in recent years. According to official data from the key regulatory players of the Greek renewable energy market, the national electricity production from renewable energy sources (RES) power plants has been steadily increasing; and, in the later months of 2023, the RES share in electricity production reached more than 50% of the total energy mixture.
Also, Greece is ranked seventh on the global scale for use of renewable energy in its gross final energy consumption, with considerable prospects of further penetration of RES energy in the total energy mixture. The funding of RES projects though the EU’s Recovery and Resilience Facility has proved to be a crucial instrument in the financing of utility-scale RES projects (one of the pillars of the National Recovery and Resilience Plan adopted and implemented by the Greek State is the green transition, which is realised through the development and operation of RES plants).
In the coming years, interest in the development of energy storage plants is also expected to increase, given that many financial and regulatory incentives have been made available for promoting energy storage, by virtue of recently passed legislation (eg, Greek Law No 4920/2022). Also, quite recently (in August 2023), the Greek State submitted to the EU a proposition for the revision of the National Recovery and Resilience Plan, including certain investments and reforms regarding RES energy storage plants, and the operation of pilot projects for green hydrogen production, biomethane production, and carbon capture and storage plants/facilities.
Under Greek law, lending obligations are secured by securities in personam and/or by securities in rem.
Securities in personam include personal and corporate guarantees, while securities in rem include mortgages or prenotation of mortgages over real estate properties and pledges over movable assets, shares, debt instruments, rights and claims of the pledgor against third parties.
The provisions of Legislative Decree 17.7.1923, which are favourable for credit institutions, should also be mentioned; they provide that the pledge created by the pledgor over its claims against third parties results in assignment of the claims in favour of the pledgee/credit institution. As a consequence, the pledgee becomes the sole beneficiary of such claims.
Security over real estate assets is created by mortgage (by virtue of a notarial mortgage deed) or by mortgage prenotation (by virtue of a county court decision) and is perfected by registration in the public books of the competent land registry or cadastre where the real estate asset is located. Prenotation of mortgage provides its beneficiary with the pre-emptive right to obtain a mortgage perfected as of the date of registration of the prenotation of the mortgage, once its claim becomes final. Such security extends to all component parts and accessories of the real estate (ie, machinery and equipment).
As far as machinery and equipment are concerned, security can be created by a non-possessory pledge agreement by virtue of Article 1 of Law No 2844/2000, and perfected by registration in the public book of Law No 2844/2000 kept by the competent public registry where the borrower has its corporate seat.
A security over receivables (such as trade receivables and insurance proceeds) is created by a private agreement and perfected by notification to the debtor of the relevant claims. In banking practice, such security is granted in the form of a pledge and assignment of the receivables due to such pledge, by virtue of Legislative Decree 17.7.1923. Security over business receivables may also be granted under Articles 11–15 of Law No 2844/2000 and perfected by registration in the public book of Law No 2844/2000 kept by the competent public registry where the borrower has its corporate seat (in addition to notification to the debtor).
Security may extend to future receivables, provided that they are specifically defined in the security agreement and fall within the scope of the pledge. The pledgor will be free to collect the receivables if no default is outstanding, if such agreement is provided in the security agreement.
Collateral security over cash deposited in bank accounts is created by a private agreement and perfected by notification to the bank holding such accounts. Standard practice provides for such collateral in cash to be governed by Legislative Decree 17.7.1923 and/or Law No 3301/2004 on financial collateral agreements.
Collateral security (pledge) over the company’s shares is created by a private agreement and perfected by physical delivery of the shares to the pledgee or a third-party custodian.
Greek law provides for floating charges under the provisions of Law No 2844/2000. A floating charge can be granted over movable assets. In any case, in order for the floating charge to be perfected, the private agreement must be registered in the public book of Law No 2844/2000 kept by the competent public registry where the borrower has its corporate seat. Security over future assets is permitted provided that they are defined or definable at the time.
Mortgages and prenotation of mortgage over real estate, non-possessory pledges and floating charges over chattels are subject to registration in the public books of the competent land registry and/or cadastre. Registration fees for the land registry amount to 0.775% of the secured amount, and registration fees for the cadastre amount to 0.875% of the secured amount. In the case of mortgages, notarial fees range from 0.2% to 1% of the secured amount; and for prenotation of mortgages, court fees do not exceed EUR300.
A pledge over shares is not subject to any costs or fees. A security over receivables, if created by virtue of Legislative Decree 17.7.1923, is subject to court bailiffs’ costs for the debtor to be notified and, if created by virtue of Articles 11–15 of Law No 2844/2000, is subject to the costs described above for the security agreement to be registered in the competent public books.
Under the legal framework for bond loans, registration fees are fixed at EUR100 per registration, which minimises the costs of security granted under bond loans.
In order to create a valid security interest, the item over which security is granted should be adequately defined. As mentioned above, security over future items may be created/granted to the extent that they are defined or definable. Finally, for a floating charge, the items over which such floating charge is created may be described in general to the extent they have distinctive characteristics.
Pursuant to the provisions of Article 51 of Greek Law No 4548/2018 (the “Société Anonyme Company Law”), a company (other than a credit institution) is not allowed to make down payments or provide guarantees and/or loans to support borrowings incurred to finance the direct or indirect acquisition of its shares by third parties, unless the following conditions are met.
Pursuant to the provisions of Article 51 of the Société Anonyme Company Law, the restrictions mentioned in the first point above also apply to down payments, guarantees and/or loans provided by subsidiaries for the acquisition of the parent company’s shares by third parties.
In order to confirm that there no other liens, the lenders can conduct research in the public books kept by the competent land registry/cadastre office or pledge register.
Τhe most common ways securities are released include either by a private agreement or by a notarial deed, depending on how the security was created. Moreover, if the security was perfected by registration, the release must also be registered. When there was physical delivery, the assets must be redelivered to the pledgor. Also, notification to third parties may be required.
Provided that there is an event of default under any finance document (and the lender notifies the borrower of such event of default), in accordance with the specific relevant provisions included in the financing agreement(s), the secured lender may enforce its collateral.
The stages and respective timeframes of enforcement proceedings are described in detail pursuant to the provisions of the Greek Code of Civil Procedure, which is the main applicable law governing enforcement in Greece.
As a general rule, it is a prerequisite for the commencement of the enforcement procedure that the secured creditor, who wishes to enforce its collateral, must obtain an enforceable title (ie, mainly through non-appealable judgments, arbitral awards, payment orders, notarial deeds, etc).
As regards monetary claims, the enforcement procedure involves four main stages:
In principle, the proceeds are distributed to all the creditors who participated in the liquidation process. When the auction proceeds are less than the total claims of the creditors who participated in the procedure, they are proportionally distributed among the participating creditors. However, it must be noted that certain categories of creditors have priority over the proportional distribution – eg, claims of the State, other public entities and social security authorities as well as claims for wages have a minimum priority of 25% of the total proceeds, whereas secured claims (ie, collateral security on the specific asset on which enforcement takes place) have a minimum priority of 65% of the total proceeds.
Apart from the enforcement procedure provided for in the Greek Code of Civil Procedure and briefly summarised above, in Greek law there are also processes where the secured lender may satisfy its secured claims without having to resort to court proceedings and the liquidation of the debtor’s assets through public electronic auction. Such processes are provided for by Legislative Decree 17.7.1923 and Greek Law No 3301/2004.
Regarding Legislative Decree 17.7.1923, a pledge of claims constituted under its provisions arguably results in the pledgee-credit institution acquiring full ownership of the claim and, thus, the pledgee-credit institution is entitled to collect such for the repayment of the secured claims, having the obligation to return to the pledgor-debtor any amount exceeding the secured claim after its satisfaction in full.
Regarding Greek Law No 3301/2004 on financial collateral agreements, the satisfaction of the pledgee-creditor is effectuated through sale, set-off or application of the financial instruments and/or cash in discharge of the relevant obligations.
Concerning the possibility of the enforcement being taken directly by a security agent, it should be noted that, in the Greek legal system, the role of the agent/trustee is not generally recognised. The only exception to such general rule is provided for by the bond loan legal framework (Greek Law No 4548/2018), under which any security granted by the borrower is granted in the name of the bondholders’ agent, for the benefit of the bondholders. The bondholders’ agent is responsible for enforcing any collateral security securing the bond loan and for applying the proceeds from the collateral to the claims of the bondholders pro rata, unless otherwise agreed by the bondholders. Also, in the context of a syndicated credit facility, the lenders may enter into a contractual agreement (intercreditor agreement) provided that the collateral security is granted in the name of the security agent/trustee, who is also a joint and several creditor with the other secured lenders. However, lenders are not protected in the case of insolvency of the security agent.
The applicable law on the issue of a foreign law as the governing law of a contract, and on submission to a foreign jurisdiction, is as follows.
Based on the aforementioned, in principle the parties to a contract are free to choose the governing law of the contract. However, it must be noted that there are certain restrictions on this freedom of choice, which are imposed by Greek public order and any other overriding mandatory provisions – ie, provisions of public interest (eg, relating to the constitutional, political, social or economic organisation of the Greek State), which are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract. Therefore, subject to the aforementioned limitations, the choice of a foreign law as the governing law of a contract would be upheld by Greek courts, which would recognise and enforce contracts that are subject to the foreign governing law.
Additionally, submission to a foreign jurisdiction by the parties to a contract is, in principle, legally binding and enforceable under Greek law.
Regarding judgments given by a foreign court, the following provisions (applicable law) will be taken into account, depending on the case:
As such, although in principle Greek courts will recognise and enforce a foreign judgment without re-examination of the case, such recognition and enforcement may be denied if any of the following applies:
For arbitral awards, the following provisions (applicable law) will be taken into account, depending on the case:
As such, in principle Greek courts will recognise and enforce an arbitral award without re-examination of the case, subject to certain limitations, including:
If the loan or security agreement is governed by Greek law, there are generally no issues that might impact on a foreign lender’s ability to enforce its rights thereunder. However, it has been argued that foreign lenders do not enjoy the benefits of Legislative Decree 17.7.1923.
EU Banks intending to provide banking services in Greece must notify the competent supervisory authorities, whereas non-EU banks must fulfil licensing requirements. More specifically, Greek Law No 4261/2014 (ie, the law regulating credit institutions) provides that, for non-EU credit institutions, a special authorisation by the Bank of Greece is required.
In general, there are no restrictions in relation to the granting of security or guarantees to foreign lenders.
Attracting foreign investments in Greece is a fundamental goal of the Greek government. Thus, there are no material restrictions imposed on foreign investors. Each type of foreign investment – depending on the industry in which each investor operates – may have specific legislative requirements (in most cases, special permissions by the competent Greek authorities and other licensing requirements).
It should also be noted that in recent years efforts have been made to simplify the general investment licensing procedures in Greece. One of the most important legal frameworks tackling this issue is Greek Law No 4635/2019, which aims at the rapid and decisive improvement of business environments (especially in areas critical to productive investments) and, inter alia, provides fast-track audit procedures and certifications for commencement and completion of investment projects.
As discussed in 8.1 Withholding Tax, interest payments to foreign lenders are, in principle, subject to Greek withholding tax (currently at the rate of 15%), if not otherwise provided for in the tax treaty (if any) between Greece and the jurisdiction in which the foreign lender is tax-resident.
On another note, undistributed income (ie, dividends, interest, etc) of foreign legal entities participating 50% or more in the share capital of a project entity in Greece, and being tax residents in a non-cooperative jurisdiction or with a beneficial tax regime outside the EU, is considered taxable income. Also, there is a 5% withholding tax on dividends paid out to non-Greek parent companies of Greek project companies (unless otherwise provided for by a double taxation treaty or where the EU Parent-Subsidiary Directive applies).
It is permissible for a project company established under Greek law to maintain foreign currency accounts in and outside Greece.
In general, there are no formal registration or filing requirements in relation to financing or project agreements, except for certain security and collateral documents (such as pledge agreements and mortgages) and licensing documentation related to the project.
In general, ownership of land does not require a licence. However, ownership of natural resources may be subject to a licensing system (depending on the time of acquisition). In any case, the business of operation and development for projects related to the exploitation of, or construction on, such land requires certain permits, authorisations and licences granted by national or regional authorities, depending on the location, size and nature of the relevant industry/project and its environmental impact.
As mentioned in 3.1 Enforcement of Collateral by Secured Lender, in the Greek legal system, the concepts of agent and trustee are not generally recognised. The only exception to this general rule is provided for by the bond loan legal framework (Greek Law No 4548/2018), under which any security granted by the borrower is granted in the name of the bondholders’ agent, for the benefit of the bondholders.
The bondholders’ agent is responsible for enforcing any collateral security securing the bond loan and for applying the proceeds from the collateral to the claims of the bondholders pro rata, unless otherwise agreed by the bondholders. Also, Greek Law No 4548/2018 provides that when a bond loan is governed by foreign law, collateral security and guarantees are granted in the name of the person who, under the law governing the bond loan, may hold security and guarantees on its account on behalf of the bondholders.
Since the Greek legal system does not recognise the trust structure, an alternative structure appears in the context of syndicated credit facilities, where the lenders may enter into a contractual agreement (intercreditor agreement) which provides that the collateral security be granted in the name of the security agent/trustee, who is also a joint and several creditor with the other secured lenders. However, lenders are not protected in the case of insolvency of the security agent.
Priority of real security depends on the priority of perfection of that security compared to any other real security established on the same asset. Any prior ranking security interests will be satisfied before any subsequent ranking security interests. Also, the satisfaction of secured creditors is subject to the provisions of the Greek Code of Civil Procedure, which regulates the liquidation process in the context of the enforcement proceedings. The enforcement proceeds finally attributable to each secured or unsecured creditor depend on whether there are any generally privileged creditors and/or any prior ranking secured creditors (for this matter, please refer to 3.1 Enforcement of Collateral by Secured Lender and 6.3 Priority of Creditors).
Contractual subordination arrangements by private agreement, including provisions regarding the priority with which creditors’ claims are satisfied, are common in the Greek market. A standard undertaking included in such agreements is that a junior lender may not enforce or collect the junior claim before enforcement or full repayment, respectively, of the senior claim. A common variation of a contractual subordination arrangement by private agreement are intercreditor arrangements, which normally distinguish between junior debt and senior debt, and provide for payments to be made to an intercreditor agent (normally a bank) and regulate the way in which payments can be made to each class of creditor both before and after enforcement. They also include the conditions on which each class of creditor can enforce its claims.
In the case of insolvency of the borrower, contractual subordination arrangements still apply and govern the priority between secured creditors as well as the subordination of the unsecured creditors to the secured ones. However, contractual subordination arrangements do not affect creditors whose claims have a general privilege for satisfaction from the whole of the debtor’s estate (such as the Greek State or the Social Security Authorities).
In general, the Greek legal framework does not require that the project company be organised under Greek law. However, currently the most used and preferred method of financing in the Greek market is financing in the form of bond loans under Greek Law No 4548/2018, which provides that the issuer of the bond loan can only be in the legal form of a société anonyme and have its registered seat in Greece.
According to the provisions of Greek Law No 4738/2020, at the pre-insolvency stage, a restructuring agreement can be concluded between the debtor and a certain percentage of its creditors (ie, at least 50% of the debtors’ total secured liabilities, as well as creditors representing at least 50% of the debtors’ other liabilities). Such agreement is ratified by court decision.
It should be noted that, from the filing of said restructuring agreement for ratification by the court until the issuance of the relevant court decision, all individual and collective enforcement action is automatically suspended. This moratorium may not normally exceed four months. The restructuring agreement may include more specific provisions in relation to such moratorium. However, the aforementioned restructuring agreement does not affect the rights of the secured creditor under a financial collateral arrangement (under Greek Law No 3301/2004).
According to the provisions of Greek Law No 4738/2020, as a result of a company being declared insolvent, a suspension of all individual enforcement actions against it is imposed on all unsecured creditors and/or all creditors whose claims have a general privilege for satisfaction from the whole of the debtor’s estate (eg, the State, other public entities, social security authorities, etc). However, the suspension of individual enforcement actions does not apply to secured creditors (ie, creditors whose claims are secured by special privilege or real security on a specific asset of the debtor’s estate), for a period of nine months after the declaration of insolvency.
The claims of the secured creditors are satisfied by the liquidation of the asset on which the relevant special privilege or real security exists in their favour. If the amount collected by the liquidation of such asset is not sufficient for the full repayment of the claim of the secured creditor, the latter may satisfy the remaining amount of its claim by the whole bankruptcy estate.
Nevertheless, the suspension of the individual enforcement actions applies to the secured creditors in the following cases:
On another note, after the filing of an application for a debtor to be declared insolvent, interim measures may be ordered by the competent court in order to prevent a reduction of the value of the bankruptcy estate and any material adverse effect that may jeopardise the interests of the creditors. Such interim measures do not apply to the secured creditors and do not affect the rights of a creditor under a financial collateral arrangement (under Greek Law No 3301/2004) or the rights of the assignee under an assignment security agreement. The interim measures ordered by the court automatically cease on the date the court decision for the declaration of insolvency is published.
Regarding the procedure for liquidation of the bankrupt debtor’s estate, it should be noted that liquidation proceeds in the context of the bankruptcy proceedings are distributed in accordance with the provisions of the Greek Code of Civil Procedure, which regulates the liquidation process concerning the enforcement proceedings in general. The same system of privileges also applies.
More specifically, as mentioned 3.1 Enforcement of Collateral by Secured Lender, in principle the proceeds are distributed to all the creditors who participated in the liquidation process. When the liquidation proceeds are less than the total claims of the creditors who participated in the procedure, they are proportionally distributed among the participating creditors. However, certain categories of creditors have priority over the proportional distribution, as follows:
Please also refer to 6.2 Impact of Insolvency Process.
As mentioned in 6.2 Impact of Insolvency Process, in the case of insolvency, the claims of the secured creditors are satisfied by the liquidation of the asset on which the relevant special privilege or real security exists in their favour. If the amount collected by the liquidation of such asset is not sufficient for the full repayment of the claim of the secured creditor, the latter may satisfy the remaining amount of its claim by the whole bankruptcy estate. In view of this, a risk exists that the proceeds from the liquidation of the asset (on which the relevant special privilege or real security exists) or the proceeds from the liquidation of the whole bankruptcy estate will not be sufficient for the full repayment of the claim of the secured creditor.
According to the provisions of Greek Law No 4738/2020, every person (regardless of whether they have a commercial status) as well as legal persons pursuing an economic purpose are subject to bankruptcy proceedings. Legal entities governed by public law, public authorities in general and local authorities are not subject to bankruptcy proceedings and cannot be declared bankrupt.
As regards certain categories of legal entities, in the context of the Greek legal framework, there are separate laws providing for and regulating special liquidation processes, namely:
There are no restrictions on insurance policies over project assets provided or guaranteed by insurance companies.
Insurance policies over project assets may be payable to foreign (secured) creditors.
As regards payments of interest, the current rate for withholding tax on interest from bond loans is 15%. In particular, interest payments to foreign lenders (ie, tax residents outside Greece and without a permanent establishment in Greece) are subject to Greek withholding tax (currently at the rate of 15%), if not otherwise provided for in the tax treaty (if any) between Greece and the jurisdiction in which the foreign lender is tax-resident. It should be noted that interest payable on credit facilities concerning either domestic or foreign lenders is not subject to withholding tax.
As regards bank loans and credit (other than bond loans) granted to a Greek resident, an annual contribution of 0.6% is imposed on the average outstanding monthly balance of such loan/credit. It has been clarified that loans between banks, loans to the Greek State and loans funded by the European Investment Bank or the European Bank for Reconstruction and Development are exempt from said contribution. Also, it should be noted that in the Greek banking system it is standard practice for loan and credit agreements to provide that, where the aforementioned contribution applies, the borrower will bear the relevant cost and will reimburse the lending bank for that cost (in an amount payable over and above interest).
Non-bank interest rates are subject to a legal maximum (for both the normal and the default rate). It is permitted to compound non-bank interest only if interest remains overdue for at least one year in accordance with the general provisions of the Greek Civil Code.
Bank interest rates are not subject to a legal maximum, though floating interest rates are adjusted by reference to a clear and transparent base rate (such as EURIBOR). However, the default interest rate charged by banking and credit institutions cannot exceed 2.5% per annum over and above the contractual interest rate. Compounding of interest is permitted to compound bank interest only at the end of a six-month interest period (or any longer contractually agreed interest period) and interest can only be compounded provided that the loan agreement explicitly allows for compounding of interest.
Project agreements are typically governed by Greek law. However, often the project agreements are governed by foreign law (mainly English or German law), subject to compliance with private international rules of the countries related to the contracting parties and/or the project.
Financing agreements are generally governed by Greek law, especially when financing is provided by Greek banks. However, in international financing projects, the facility agreements are often governed by English or German law.
In all cases, security documentation regarding assets located in Greece, mortgages and registration matters shall be governed by Greek law.
The Renewable Energy Market in Greece
Electricity production from renewable energy sources (RES) in Greece is a fully liberalised market, as the Greek State has integrated all energy market liberalisation packages, in accordance with EU rules. Therefore, there are no legal or real entrance barriers to the RES energy market.
It is to be noted that Greece’s strategic position and climate characteristics offer important potential for all types of RES technologies. Wind and solar power plants represent most of the installed capacity in Greece; however, small hydroelectric plants, biogas and biomass occupy a considerable market share. As Greece runs an ongoing plant focusing on decarbonisation, a significant pipeline of RES projects (mainly large-scale PV plants) is being constructed and developed throughout the territory, and especially within depleted lignite fields (with Public Power Corporation (PPC) leading the position, through its affiliate Public Power Corporation Renewables (PPCR)).
According to official data of the regulatory key players of the Greek market (RAAEY, IPTO), the national electricity production from RES power plants in the system has been steadily increasing in recent years. In the most recent months of 2023, RES share in electricity production steadily reached more than 50% of the energy mixture.
Greece is ranked seventh on the global scale in the use of renewable energy in its gross final energy consumption, with considerable prospects of further penetration of RES energy in the energy mixture.
In addition to the above, and due to the potential of the RES energy market in Greece, there is constantly and rapidly increasing interest for both domestic and foreign investments regarding the development and construction of all RES technologies.
Net Zero/Carbon Reduction Targets – Energy and Climate Policy
The Hellenic Republic has adopted a National Energy and Climate Plan (NECP, or ESEK as per its Greek acronym), which constitutes a strategic plan for the Greek government on climate and energy issues and presents a detailed roadmap for the achievement of specific energy and climate goals by the year 2030.
The NECP was adopted in the context of the Hellenic Republic’s compliance with Regulation of the European Parliament and of the Council 2018/1999 aiming to ensure the achievement of the objectives and targets of the European Union (EU) for 2030 and the long-term (net-zero greenhouse gas emissions within the EU by 2050), in accordance with the 2015 Paris Agreement.
Regarding the increase of the use of RES in energy consumption, the NECP has set ambitious targets concerning the use of RES in:
Following the REPowerEU Plan and the ongoing energy market disruption, the NECP is under revision, aiming to achieve and further accelerate removal of the complete dependence on fossil fuels. To that end, a revised draft of the NECP has been drafted and sent to the market participants for consultation. The revised NECP draft is expected to be submitted to the European Commission by October 2023, aiming to increase the share of RES energy in energy consumption, and gives emphasis to offshore wind parks, energy storage and the gradual development of green hydrogen facilities.
As a demonstration of its commitment to gradually transitioning towards a fossil fuel-free scheme, the Hellenic Republic has also adopted the first “National Climate Law” (Law 4936/2022), which establishes measures and policies to adapt the country to climate change and ensure the path of decarbonisation by the year 2050 and, among others, prohibits the production of electricity from solid fossil fuels from 31 December 2028.
Key Regulatory Players
The Greek renewable energy market is operated and regulated by various authorities/bodies and has a number of key market players/participants.
As in every EU member state, the competent Ministry of Energy, and the Regulatory Authority for Energy, Waste and Water (RAAEY as per its Greek acronym, to which the former Regulatory Authority for Energy (RAE) was renamed by virtue of Law 5037/2023), play a key role in the drawing up and adoption of national energy policies, and in specifying the measures and strategies for meeting energy needs and achieving the national goals of climate neutrality by 2050.
In particular, RAAEY is an independent administrative authority and member of the Agency for the Cooperation of Energy Regulators (ACER), empowered, inter alia, to:
The following entities also play an important role, although they are not formally market regulators.
Legal and Regulatory Framework – Licensing Procedure
The legislative framework governing (in general) the operation of the electricity market and the energy sector in Greece is set out by Law 4001/2011.
The development, construction, grid connection, commissioning and commercial operation of RES projects in Greece is regulated by several laws, most of them primarily adopted in order to transpose relevant EU legislation into national legal order. Laws 4685/2020, 4951/2022 (which replaced Law 3468/2006 and was adopted with an aim to further simplify and accelerate the permit-granting process, in line with the relevant provisions set out under RED II) and 4414/2016 have a prominent role.
Law 4685/2020 regulates the first phase of the licensing procedure required for typical scale projects (up to the issuance of a producer’s certificate) providing for simplified, digital and automated procedures, enabling the acceleration of the process.
Law 4951/2022 consists of the second licensing phase following the issuance of a producer’s certificate and until the granting of an operation licence.
Law 4414/2016, which has been adopted in compliance with the EU Guidelines on State aid for climate, environmental protection and energy, sets out the support scheme under which RES projects operate through long-term operating contracts or through direct participation with the energy market.
In its most common form, the RES licensing process, as regulated under Laws 4685/2020 and 4951/2022 in force, includes a series of licences, approvals and opinions from a variety of authorities. In brief, those main licences are the following:
Some small-scale projects are exempt from the obligation to obtain many of the aforementioned permits.
The above legislative framework is supplemented by a number of secondary legislative acts, mainly in the form of ministerial decisions and decisions of RAAEY, to regulate in a more detailed way various issues relating to the development, construction and commercial operation of renewable energy projects, such as environmental, spatial planning, building and operational issues.
Operation of the Energy Market
Law 4425/2016 adopted the European Target Model and introduced the operation of four separate electricity markets:
In particular, RES producers may opt to participate in the energy market either:
The current PPA market in Greece is continuously growing.
RES producers participate in the Electricity Markets either directly or indirectly. In the latter case, they shall enter into a “representation agreement” with a cumulative representative body (RES Aggregator, or FoSE as per its Greek acronym), by virtue of which the rights and obligations of being a participant of the electricity markets shall be transferred to the RES Aggregator.
RES Energy Production Operating Aid Scheme
The main incentive for promoting increased use of RES is the fact that RES projects enjoy a special support scheme, under which the RES projects’ owners proceed to the execution of operating aid agreements.
The current operation aid scheme is governed and regulated by Law 4414/2016.
Law 4414/2016 abolished the feed-in tariff regime (FiT) of Law 3468/2006 and established the feed-in premium (FiP) mechanism, which is a market-based tariff in the form of a differential mark-up on the wholesale electricity market price for new RES plants coming into operation (trial or standard). However, under the support scheme introduced by Law 4414/2016, there are still some categories (mainly small-scale and demonstration projects) for which a fixed-tariff operating aid agreement is exceptionally concluded.
Law 4414/2016 also provides for the holding of auctions for certain RES categories/technologies (for the time being, wind and solar parks), from which the reference tariff (RT) for the FiP will be derived. Essentially, an FiP is a premium to the generator’s revenues, resulting from the price of the auctions. The auction scheme was initially approved until 2020; however, pursuant to the European Commission’s decision (C(2021)8651) in November 2021, the auction scheme has been extended until 2025.
Challenges for the Future Penetration of RES in the Energy Mixture
While the RES energy market is rapidly developing and the licensing procedure is constantly being simplified and accelerated, there are still challenges that limit the development of RES projects.
The growing demand and penetration of RES in the energy mixture, as well as the more ambitious targets anticipated by the (under revision) NECP, require focus by the Greek State on upgrading and expanding the grid, in order to satisfy the needs arising from the constantly increasing capacity of RES plants and to secure stability.
Due to the unprecedented renewable capacity that has been licensed in recent years, and taking into consideration the capacity-constrained infrastructure, the procedure for the granting of a final grid connection offer (GCO) has become considerably long-lasting. RES projects are classified into categories in terms of priority for GCO granting – the grid connection priority regime – introduced by Ministerial Decision No ΥΠΕΝ/ΓΔΕ/84014/7123/12.08.2022. By virtue of said decision, specific terms and requirements have been imposed on specific project categories, as well as an additional bond being requested and certain criteria for the substantiation of the project owner’s financial strength.
Financing of Utility-Scale RES Projects (Project Finance)
The standard financing scheme includes a combination of equity (usually 20–30%) and bank financing (usually 70–80%).
Lately, the funding of RES projects though funds of the EU’s Recovery and Resilience Facility has proved to be a crucial instrument in the financing of utility-scale RES projects. It should be noted that one of the pillars of the National Recovery and Resilience Plan adopted and implemented by the Hellenic Republic (“Greece 2.0”) is the green transition, which is realised through the development and operation of RES plants.
Quite recently (on 31 August 2023), the Greek State submitted to the EU a proposition for the revision of the National Recovery and Resilience Plan, including a bundle of investments and reforms in the framework of REPowerEU (through EU funds amounting up to EUR795 million), such as:
Electricity Storage – the New Trend
In recent developments, there has been a constantly and rapidly increasing interest in the development of energy storage plants, mainly due to the operation aid scheme recently implemented by the Greek State, as discussed below.
Electricity storage is regulated by the relevant provisions of Law 4001/2011, as amended/supplemented by Law 4951/2022. The activity of electricity storage is subject to the granting of an electricity storage licence, issued by RAAEY. No distinction is made between electricity produced by conventional sources and electricity produced by renewable energy sources.
Pursuant to Law 4920/2022, financial and regulatory incentives are made available for promoting energy storage. In particular, investment aid or annual operating aid may be granted to storage units connected to and operating in the HETS, as well as storage units installed in countries within the European Economic Area. The aid scheme described above has an estimated budget of EUR341 million and was approved by the European Commission. Said measure will be partly funded by the Recovery and Resilience Facility.
Accordingly, in May 2023, a Ministerial Decision was issued which specifies the competitive tendering procedure for the granting of an investment aid or annual operating aid. In particular, the Decision states that three distinct tendering procedures are to take place in 2023, and the total capacity to be auctioned will amount to 1,000 MW.
The first competitive tendering procedure (auctioned capacity 400 MW) took place in summer 2023, and the results were announced on 10 August 2023. The announcement of the exact date of the second (auctioned capacity 300 MW) and third (auctioned capacity 300 MW) competitive tendering procedures is anticipated.
In terms of financing sources, apart from bank financing, the EU’s Recovery and Resilience Facility is deemed to be an important and much-needed instrument in the financing of renewable energy storage projects, taking into consideration the constantly increasing interest for the development and operation of renewable energy storage plants.
The most important and latest developments in the Greek RES energy market are the following.