Green transition has become the “talk of the world” in recent years, notably with increasing intensity and urgency in the midst of the sharp increase of energy cost and disastrous weather phenomena around the globe. As regards Greece in particular, transitioning to a green economy is arguably the greatest policy challenge of our era, as it touches upon a series of crucial aspects of local economy and social life, such as promoting sustainable growth, ensuring adequate protection from natural disasters and safeguarding the country's natural, cultural and historical heritage – perhaps its most valuable asset and competitive advantage.

The transition from a traditional fossil fuel-based economy to a more sustainable system based on renewable energy sources on a global scale poses several challenges. Based on our experience as legal experts on the field in the last two decades, it is clear that Greece has its fair share of such challenges as well as its own particularities and constraints.

  • Regulatory framework: Clear and consistent government policies and regulations are necessary to form a stable and predictable investment environment and offer incentives for accelerated renewable energy development. Although important steps have already been taken towards this direction, the regulatory framework in Greece remains to a large extent complex and often problematic and ineffective, especially as regards permitting deadlines and interface with licensing and regulatory authorities.

  • Grid access and efficiency: The increased investor appetite for renewable energy projects in Greece, spiking in the recent years, has resulted in a significant acceleration of the green transition but also revealed the lack of adequate grid infrastructure to satisfy investor demand, resulting in a huge backlog of pending applications for grid terms and creating a bottleneck deterring further growth. At the same time, the increased penetration of renewables in the energy mix results in production curtailment for existing and – mainly – future projects which in turn undermines their profitability. Steps are already being taken, both at EU and national level, to address such inefficiencies and risks, including via the promotion of storage, funding of grid investments through state aid instruments and other grid access prioritization regulatory measures, but this may prove “too little, too late” to sustain investment momentum, unless these efforts are accelerated and intensified.

  • Funding and bankability: Albeit investor appetite is still vivid, the sustainability and further stimulation thereof may be questioned in the near future. The gradual maturity of the market along with the aforementioned regulatory and grid constraints and the inflationary economic cycle impacting on lending interest rate levels may cast doubts on the bankability and long-term attractiveness of such investments. It thus becomes imperative to continue the successful implementation in Greece of EU funding schemes, such as the Recovery and Resilience Fund (RRF), and make the most of the long anticipated investment grade credentials, so that Greece remains an attractive market for investors.

  • Security of supply and local production: Given that renewable energy technologies heavily rely on critical minerals and components, Europe's lack of adequate own production and its significant dependence on imports poses a threat to security of supply but also makes renewable investments vulnerable to geopolitical tensions or supply chain disruptions. For Greece, the stimulation of local production and technological innovation in this field, especially batteries and offshore wind park components, is a real challenge and opportunity for diversification of supply chains and economic and social added value.

  • Social acceptance: While renewable energy sources are more environmentally friendly than fossil fuels, their environmental and social impact is a matter of scrutiny and, in some cases, strong opposition by environmental groups, residents and local authorities, especially at times of acute weather phenomena and natural disasters as the ones Greece is increasingly facing nowadays. Perhaps ironically, there is often a tension between, on one hand, the need to stimulate employment caused by job displacement in traditional fossil fuel dependent regions and encourage investor initiatives to reward local communities hosting renewable projects and, on the other hand, the concerns raised about visual impact, noise, land use and adverse side effects on traditional local economic activities. The deeper the renewables penetration, the more intense this tension and frictions are bound to become.

It is a no brainer that overcoming the green transition challenges requires a coordinated effort from governments, industry stakeholders, experts and communities. But to simply state the obvious, without taking concrete practical steps fast, will not take us anywhere far, especially in such a volatile global environment, which has become the new norm. More than ever, there is a need for a change of paradigm, driven by bold initiatives for the elaboration of a new business and social model combining reasonable financial returns with tangible social gains. It has become apparent that is not enough any more to rely on the traditional economic and business criteria of profitability, bankability and financial rates of return or vague notions of political and fiscal stability and competitiveness as the ultimate measures of growth and prosperity. Businesses and governments have come to realize that addressing the environmental and social impact of economic activity is key in preserving project viability and growth sustainability.

Particularly in the realm of energy markets, factoring in such environmental and social impact parameters should not be reduced to a compliance formality, a typical “tick the box” in corporate annualreports, financial models and IPO prospectuses. Instead, there is a real need and opportunity to make the most of the increased environmental and social awareness around green transition by fostering initiatives which will make a difference in everyday life. This could be done by using green PPAs to actively lower the skyrocketing energy cost for businesses and consumers, offer incentives and facilitate procedures for investors to offer rewards and benefits to local communities hosting renewable projects and in general present the tangible economic and social benefits of renewable energy so as to make them clearly visible to the public. Enhancing social acceptance of the green transition will in turn de-risk clean energy investments making them financially more attractive for investors, thus achieving a win-win outcome for communities and investors.

Obviously the Greek energy market is becoming more mature, shifting from the status of an “Eldorado” of hefty regulated tariffs to a more competitive market, inevitably suppressing to some extent profit margins and rates of return. Yet, it can still remain a promising and attractive market for investments as long as the economic and social equilibrium is actively preserved. Robust policy, technological innovation and expert guidance play a pivotal role in this respect.

No doubt, green transition poses great challenges and comes at a cost. However, slow or inadequate adaptation to new market, environmental and social developments will prove much more costly for this and coming generations. Greece is well positioned to be in the forefront of a smooth and sustainable green transition.

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