Energy Markets in Greece: Status Quo and Dynamics after the Elections
Natural Gas Market
In Greece there currently exist four gas supply companies, which, apart from DEPA (Public Gas Corporation of Greece) operate in specific geographical regions and have been created following the EU directive which provides for the complete opening of national gas markets to competition and therefore helps create a true internal gas market within the EU.  All of them are DEPA subsidiaries (DEPA holds 51% of shares in EPAs, through its subsidiary EDA) and the latter obtained exclusive licenses for thirty years from the Greek Energy Ministry. Therefore, the present situation of the domestic natural gas market can be characterized as oligopolistic and barely liberalized. Existing providers still maintain a privileged and dominant position, effectively controlling the market and leaving little room for new entries.
However, more recently after the Tsipras-lead Greek government signed the latest memorandum agreement, the third in a row, with the country’s international creditors, known as the Troika (namely the International Monetary Fund, the European Commission and the European Central Bank) a new momentum for gas markets liberalization was created.
The reason for this is that the new bailout agreement contains clauses and a strict timetable regarding the liberalization of the Greek natural gas and electricity markets. More specifically, according to the forecasts set out in the bailout agreement (Memorandum of Understanding), the liberalization of the natural gas market in Greece will commence as of January 1, 2018. The steps proposed by the Memorandum, aim at allowing all consumers to choose their supplier as of 2018.
By that time, the current providers (EPA Attica, EPA Thessaloniki and EPA Thessaly) and DEPA, must have unbundled their accounting and operating procedures with regards to the supply from their urban network management activities, or any networks operated for that matter.  In essence, the country needs to open up its retail sector by breaking up the regional monopolies maintained by the regional gas supply companies, operating in the wider Athens and Thessaloniki areas and in the region of Thessaly. The objective is to divide trading and network ownership in order to attract new suppliers to enter the market. As this prospect seems closer than ever, oil companies are planning their entry into the natural gas market, as they are submitting applications for licenses to the Greek Regulatory Authority for Energy.
In order to understand the roots of the delay in the liberalization process, however, one should look into the policies followed by previous administrations. The country’s three EPA companies signed agreements over a decade ago for exclusive gas supply rights in their respective regional markets for 30 years. BP holds a 49 percent stake in the Athens EPA venture and Italian company ENI has 49 percent equity shares in the Thessaloniki and Thessaly EPA gas supply companies. DEPA holds a majority 51 percent stake in all three. These long-term agreements, signed over a decade ago, had been endorsed by the European Commission as, at the time, the natural gas market in Greece had hardly been penetrated and a strong incentive was needed to draw companies in to invest in network and infrastructure development. The real problem that the Greek government needs to tackle is to find an effective formula on how to compensate the EPA foreign partners.
In the case of Greece, it is now more than evident that a liberalized and open natural gas market has multiple, long term and redeemable benefits to industrial and commercial consumers. Besides the direct benefits to the final gas cost, liberalization will have a direct and substantial effect on strengthening the frail Greek economy. As of yet, Greece has inherited a set of European directives, regulations and decisions, which in theory lead to the opening of the market, but once again theory lies far from action. The promised and much-awaited liberalization and modernization of the Greek natural gas market is still under way, at the expense of the country’s citizens.
Such a liberalized market would embrace the core principles and vision set out in the Gas Target Model (GTM), remaining, however, vigilant and adapting to uncertainties and challenges present in the gas market. The vision of GTM is a competitive, secure European gas market that benefits all consumers. These conditions can only be met through diversification due to ever-changing gas market dynamics, enabling markets to be competitive which ensures security of supply, facilitating the emergence of a well-functioning and transparent wholesale market and the self-evaluation process in which all Member States assess whether they are likely to meet, or continue to meet, GTM metrics. These would ensure that the correct regulatory approach is taken when looking forward. 
The latest snap election in Greece (September 20), the fourth since 2009, gave Alexis Tsipras and his left-wing Syriza party a "clear mandate" after winning a second general election in less than nine months. Syriza won just over 35% of the Greek vote, slightly down on its previous result and still short of an overall majority. Syriza, once again, formed a coalition with the far-right Independent Greeks party. The new Minister for Energy, Panos Skourletis, has openly opposed the liberalization of Greece’s energy market from the very start. Skourletis has been insisting that Greece’s national electricity company, the Public Power Corporation (PPC), should remain a state business. "There won't be a further privatisation of PPC. The state will retain a majority stake," Energy Minister Panos Skourletis told Real News radio. It should be noted that the Greek state owns 51 percent of PPC, which controls 97 percent of Greece's retail electricity market. Skourletis is also seeking measures to avoid the privatization of the electricity transmission network operator (ADMIE) that currently belongs to PPC and which the Syriza government agreed with its European creditors in July to privatize immediately. Skourletis' stance against liberalization, though, should not be presumed unalterable. Syriza took power in January promising it would reverse the past bailout agreements’ terms but has recently signed a new bailout agreement with stricter terms, including the privatization of key public assets.
Clearly, Greece’s energy policy is in dire need of a different approach, much more than merely implementing the suggested reform agenda. First and foremost, the liberalization of the energy market needs to take place transparently (a very hard task in the case of Greece). Secondly, it has to be clear that market liberalization is not about simply changing the market character from public to private, but it is about engaging with the private sector in a newly formed market structure along the entire value chain. Modern electricity systems have grown very complex and the need to embrace decentralized renewable energy generation, energy storage and flexible electrical networks requires skillful policymakers with ideas of their own and solutions to suggest. 
Overall, looking at Greece’s energy markets not much has changed, and the Greek power market is no exception. The country’s electricity demand is on the rise and about 40% of its power generation comes from coal. This means there are plenty of unutilized opportunities for policymakers to champion new initiatives and move towards a more sustainable national energy mix, where the share of renewables would grow together with that of natural gas.
Recent developments on the Greek energy scene to watch out for
The first profits from oil exploration have been appropriated to the State Fund
Although hydrocarbons investigations are still at a fairly early stage, the first profits for the state coffers have already been recorded from this activity. Overall the concessions in Ioannina, Katakolon and Patras but also the sale of seismic data, has been said to have allocated funds of 33 million euro which is kept in a special account at the GAO (General Accounting Office).
The 180-degree turn in energy policy and American smiles
In just five months, since last May, the climate between the US State Department and the Greek Ministry for Energy has changed drastically. Whereas the two were on the verge of conflict, they are now entering a strategic cooperation. In May, the last time Amos Hochstein, special envoy for Energy for the State Department was in Greece he was meeting former energy minister P. Lafazanis. At that time he stated that disagreements were found with the then political leadership of the Ministry of Energy and refused to make statements about Greece courting Turkish Stream, which he has since described as a "dead project”. The obvious discomfort of May, has now given way to smiles and statements emphasizing "the strategic role Greece can play in the region”. In fact two meetings took place, the first between Skourletis and Hochstein and the second with the Bulgarian delegation led by Minister of Energy Temenuzhka Petkova. The latter focused on two issues: the TAP pipeline and its re-branching in the north of Greece namely, the Greek-Bulgarian IGB pipeline. There is a clear intent on the part of the Greek government to "help accelerate procedures" particularly in relation to the TAP pipeline which is classified as a "task of paramount strategic importance.” Information indicates that this change in attitude is not only verbal but also a matter of substance regarding the issues that were raised.
French Investors Approaching
Hollande’s two-day visit in Athens on Thursday and Friday (October 22-23) will be focused on investments, as he will have meetings with the political and state leadership of the country. The French president will be accompanied by a fair amount of businesspersons from leading French corporations, such as Vinci, EdF, GdF Suez, Veolia and Total. This undoubtedly highlights the importance and economical aspect of this visit, as well as the energy one.
In fact, as regards the energy sector, the French interest is two-fold and targets both the hydrocarbons sector as well as the electricity market. More importantly, Total has expressed interest [and submitted a bid back in July during the final round of concessions] over the hydrocarbons explorations in the Ionian Sea.
Considering all the above, one could see that there are two parts of the equation in terms of developing the Greek energy market, both of which are equally important. There is an evident necessity for foreign direct investments in the Greek energy market. However, the current market conditions have to be improved in order to ensure transparency and regulatory predictability. Perhaps the growing interest from the foreign investors might incentivize the Greek policymakers to implement the appropriate reforms and accelerate the markets liberalization process.
1. EU Directive 2003/55/EC
2. Memorandum of Understanding Between the EC acting on behalf of the ESM and the Hellenic republic - http://ec.europa.eu
3. ACER, Gas Target Model - www.acer.europa.eu
4. Greece turns to lignite, 19. JUNE 2015, www.pv-magazine.com
Christos Brakoulias is the Deputy Head of the Greek Energy Forum in Brussels (Focus Group Policy and Regulation); Thodoros Vavikis is an Associate of the Greek Energy Forum.
The opinions expressed in the article are personal and do not reflect the views of the entire Forum or the companies that currently employ the authors.
This article is part of the knowledge partnership between European Energy Review and the Greek Energy Forum a group of energy professionals sharing common interest in the broader energy industry in Greece and South-eastern Europe. Follow Greek Energy Forum on Twitter @GrEnergyForum
Image: Sea grass in wind. By Matt. CC-BY licence.