Green tales from Greece: Mytilineos and Karatzis forge PPA advocating the foundation of three solar plants

Mytilineos and Karatzis, two leading companies in Greece, have recently signed a power purchase agreement (PPA) that will pave the way for the construction of three large photovoltaic plants in the country. This initiative will not only boost the country's renewable energy sector but also bring significant economic benefits.

Under the PPA, Karatzis will sell the electricity generated from the three projects with a total capacity of 270.8 MW to its customers. The investments for this project amount to EUR 190.8 million, of which EUR 159.6 million will be provided through the European Union's Recovery and Resilience Fund (RRF) and bank loans. This is a well-thought step towards achieving a sustainable future for Greece.

Karatzis had previously obtained loans from Eurobank and Bank of Piraeus, as well as secured equipment supply contracts. The construction of facilities near Kileler in Thessaly has already begun, and they are expected to be operational in the third quarter of 2024.

In the coming years, the company's renewables arm has set an ambitious goal of installing 330 MW of photovoltaics with batteries in Thessaly, Central Greece. The metal industry, on the whole, is extremely energy-intensive, and this green transition might be very beneficial for aluminium businesses in Greece.

The Karatzis Group's financial report for the year 2022 indicated that energy accounted for 18.2% of total sales, amounting to EUR 6.6 million. The company anticipates further growth in this area over time.

Currently, 30 Power Purchase Agreements (PPAs) have been signed in Greece, with almost an equal split between physical and financial deals. Some of these PPAs involve intermediaries, such as the arrangement between Public Power Corp. (PPC) and Viohalco, with Heron acting as the intermediary.

The market needs more time to move forward with the required speed despite the initial interest shown by large numbers of consumers. Renewable energy projects with a PPA are given priority in grid connection. However, some consumers hesitate due to reasons such as curtailments, which can create uncertainty about available production and affect virtual PPAs.

Furthermore, the expectation of a drop in power prices may lead consumers to opt for the wholesale market instead of locking a price for many years through PPAs.

Greek industries are placing their hopes on the Green Pool initiative, which is a framework of public support for new PPAs. The aim of this initiative is to assist large industrial electricity consumers such as aluminium, steel, glass and cement plants to jointly sign up under the supervision of a public body acting as a single buyer and seller for participating companies.

Unfortunately, the European Commission rejected the government's proposal for the initiative last month. The government is now working to revise and resubmit the proposal in a new and improved form.

Evangelos Mytilineos, the chairman and CEO of the Mytilineos Group, shared his distress on the rejection at the time: "Unfortunately, we heard the bad news that the Green Pool plan was rejected after a year of consultations. Each country is trying to achieve economies of scale, and it is tough."