European Commission: Commission approves €1.4 billion scheme for the development of renewable electricity in non-interconnected islands in Greece

The European Commission has approved, under EU State aid rules, a €1.4 billion support scheme to promote renewable electricity in the 29 autonomous non-interconnected island electricity systems in Greece (covering 47 islands). In particular, the scheme supports the production of electricity from so-called hybrid power stations, which both generate and store solar and wind based electricity.

Around 80% of electricity in the Greek islands is currently produced with diesel and oil. Due to saturated grids, adding storage facilities to renewable electricity generation units is necessary to increase the share of renewable energy sources in the electricity system on these islands. The 47 islands involved, including Crete, will be covered by the scheme until their eventual connection to mainland Greece. Overall, through this measure Greece aims to support 264MW of new renewable capacity until end 2026.

The Commission assessed the measure under EU State aid rules, in particular the 2014 Guidelines on State aid for environmental protection and energy (‘EEAG’). The Commission found that the aid is proportionate and limited to the minimum necessary. In the majority of islands, the aid beneficiaries will be selected on the basis of a competitive bidding procedure. On the island of Crete there is an urgent need to add more renewable capacity, due to the risk of shortage of supply. For this reason, in this island the support will be awarded to the most advanced projects through a sliding feed-in premium, (i.e. the support paid to an awarded project merely covers the difference between the operating cost and the electricity price), aiming at keeping support to the minimum necessary. The Commission concluded that the measure will contribute to the expansion of solar photovoltaic and onshore wind energy in the Greek islands, as well as to the reduction of greenhouse gas emissions by replacing oil and diesel installations, in line with the European Green Deal objectives, without unduly distorting competition. On this basis, the Commission approved the measures under EU State aid rules.