Greece considers taking Crete power cable link project into own hands

(ICIS) –The Greek government is looking into a new electricity interconnector linking the island of Crete and the mainland, ICIS the energy market information provider reports.

The Head of the Hellenic wind energy association , Ioannis Tsipouridis said that energy minister Panagiotis Lafazanis had declared the interconnection with Crete a “major target of the new government”. However, no time-line for the project has come to light so far.

So far the issue of a lack of interconnection with Crete has greatly weighed on the Greek electricity market. But the project has at least been the subject of discussion, which justifies the necessity of the project in economic, environmental and energy security terms.

The interconnection of Crete to the grid will facilitate the deployment of renewable energy projects in the island. Investors have already been expressing interest in developing renewable energy projects, 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 €400 million per year, money used to subsidise diesel generation in Crete.

indexIn 2012 Greece received EU funds to study the electricity interconnection of the country with Cyprus and Israel, through Crete using submarine cables. The goal of that very ambitious €1.5 billion plan was designed 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.

Linking Crete to the mainland could be seen as the first step towards realising that goal.

The last government was planning to privatise ADMIE, the national grid operator who is responsible for the power link, selling a 66% majority share. The buyer would have had to invest €2bn to fund the connection of the Greek islands, Crete and the Cyclades.

The plan to sell ADMIE however came to a halt when Syriza came into office following general elections in January. The new government stopped the privatisation procedures for both the grid operator and Greece’s state-owned incumbent, the Public Power Corporation (PPC), which owns ADMIE.

Since then, the energy minister has publically opposed the sale of shares in the grid operator, despite pressure from the European Commission

As Athens and Brussels struggle to break the impasse, the fate of ADMIE is still unclear. Should it remain under the ownership of the PPC however, the state would face a large bill for the interconnector project. But that would very quickly turn into profits given the savings from subsidising diesel powered electricity in the island.

The interconnection scheme could also find investors who want to build wind power and solar heat generation units on the island.

“If for example Crete is interconnected in order to exploit its enormous wind and sun potential, then the interconnection is self funded by the contractors more or less,” Tsipouridis said.

A further study into the interconnector project could also be on the government’s agenda. But details of the project appear yet to be decided. Tsipouridis said that a blueprint for the project is yet to emerge.

“Over the last ten years there have been various studies carried out by Educational institutes, PPC, … but none has any sort of seal of approval,” he said.