Caspian Report - Issue: 08 - Fall 2014

THANOS DOKOS, THEODORE TSAKIRIS
106
that now covers around 50% of the
electricity mix, down from 54% in
2012. 7
Natural gas has been a relative latecomer
to the Greek energy supply
mix. It was not until 1995 it was
introduced as a means of reducing
the negative environmental impact
of lignite-based electricity generation
and to replace the use of fuel oil
for domestic and industrial heating.
The “gasification” of Greece’s economy,
household energy consumption
and industrial production has
progressed rapidly since the early
2000s, with demand almost doubling
from 2.4 billion cubic meters
(bcm) in 2003 to an all time high of
4.4 bcm in 2011. 8 The rise in natural
gas imports displaced oil consumption
significantly and constitutes the
main reason behind the reduction
of oil’s share in Greece’s TPES, from
around 60% in 2004 to around 50%
today.
In late 1995, natural gas made up
just 0.6% of TPES, but now covers
12%. In 2004 its share of the domestic
energy “pie” was limited to 6.8%.
Gas demand increased by 10% annually
from 2002-2008, driven by
electricity generation that accounts
for 64% of consumption. Electricity
will remain the main driver of
demand, equal to 68% of consumption
in 2015 and 61% in 2020, as
an increasing number of older
PPC-owned lignite-fired electricity
generation stations (i.e. Aliveri,
Megalopoli) are retrofitted to run on
natural gas while a number of new
gas-fired stations are constructed
primarily by Independent (private)
Power Producers (IPPs). These include
Protergia (Mytilineos Group),
TERNA and the ELPEdison joint venture
between Edison and Hellenic
Petroleum. 9
Together with the economic recession
from 2010, the introduction
of higher natural gas taxes has curtailed
demand. It dropped to a low of
3.6 bcm in 2013, a 11.5% reduction
compared to 2012. Projections of future
demand vary between market
participants but the general consensus
is that the gradual recovery
of the domestic economy combined
with the continued pressure to move
away from lignite will create conditions
or relative demand inelasticity
for natural gas in the medium-term.
This translates to a mean projected
demand of approximately 7 bcm by
2020. The 2012 projection by DEPA
(the Greek Public Gas Company)
of a 9,3 bcm consumption level in
2020 seems to be inflated, and is not
shared by other market participants
or the country’s Regulatory Authority
for Energy (RAE). In its latest
annual report to the European Commission
(October 2013), RAE’s estimates
are closer to DESFA’s revised
projection of a final demand rate of
5.88 bcm in 2020, which is considerably
more realistic. 10
In spite of the increasing importance
of natural gas for the country’s
energy security and the absence of
domestic production, Greek energy
policy has been relatively successful
in consolidating the diversification
of its import dependency. As
7.
http://www.energia.gr/article.aspart_id=84558. According to Greece’s RAE net electricity
imports in 2012 accounted for merely 3,5% of demand with coal/lignite covering for 54% of
electricity generation. Regulatory Authority for Energy/RAE, 2013 National Report to the European
Commission, (Athens: October 2013), p.70
8.
BP Statistical Review of World Energy 2014, p.23.
9.
IEA, Greece Energy Review 2011, ibid, p.111-113. PPC or DEH in Greek is the largest quasimonopolistic
electricity producer of Greece that is largely controlled by the Greek state.
10.
Regulatory Authority for Energy/RAE, 2013 National Report to the European Commission, (Athens:
October 2013), pp.86-87.