Greece postpones closure of three lignite-fired power plants until 2025.

, SEE Energy News

Greece’s lignite-fired power plants owned by PPC will continue to operate beyond 2023, a departure from the government’s decarbonisation policy. In 2019, the government of Kyriakos Mitsotakis promised a rapid decarbonization of the energy sector in the country, by withdrawing almost all power plants to lignite by 2023. However, the energy crisis has led to delays, with an uncertain effect on climate targets.

The original plan called for all lignite-fired plants to be retired by the end of 2023, except for Ptolemaida 5, a new unit of Public Power Corp. (PPC) which was supposed to run on lignite for several years before converting to natural gas no later than 2028. In this way, Greece would end the consumption of lignite and replace it with renewable energy sources and natural gas.

The energy crisis has put security of supply at the forefront of energy policy, while natural gas is no longer considered a transitional fuel due to its high price. The coal-fired power sector has been urged to increase production once again over the summer to help support prices.

Lignite power plants currently produce almost 10% of the country’s electricity. According to the Minister of Environment and Energy Kostas Skrekas, the short-term goal is for lignite-fired power plants to cover 17% to 20% of the country’s needs during the winter. To make this possible, the ministry and the PPC have stepped up production in large lignite mines, but technical problems remain, as the degree of capacity efficiency has been significantly reduced in recent years.

PPC’s lignite-fired units, Melita 1, Agios Dimitrios 3 and Agios Dimitrios 4, were recently granted an extension of operation until the end of 2025. In this way, each TE is allowed about 30,000 hours of operation in the period from mid-2021 to the end of 2025. It is estimated that they have about 20,000 hours left.

Another aspect of the policy shift has to do with the new Ptolemaida 5 nuclear power plant, which is in the process of testing before being put into commercial operation at the end of 2022. In the past years, there was a plan to switch the power plant from lignite to natural gas by 2028. However, the government has not announced its plans for the Ptolemaida 5 plant and market participants believe it will continue to use lignite until at least 2028 and possibly beyond.

The energy crisis has opened up numerous uncertainties regarding the commercial viability of gas-fired plants compared to coal-fired plants. The high price of natural gas has made lignite more competitive in the market, reversing a multi-year trend.

Countries like Greece are currently preparing their revised National Energy and Climate Plans (NECPs), due in 2023. The plan should set new targets for 2030 for each technology.

According to recent studies, new natural gas plants will have difficulty remaining competitive in the wholesale market from 2025.