Greek quest to save on energy bills spurs island-owned renewables

Even with his 35-room beach-front hotel on the Greek island of Tilos close to fully booked, owner Michalis Kipraios worries his business might not “survive” sky-rocketing electricity bills, as the war in Ukraine drives up energy prices around the world.

Tilos, 360 km (224 miles) southeast of Athens, is affected even though in 2019 it became one of the Mediterranean’s first islands to generate enough wind and solar power to meet most of its needs, including hosting thousands of tourists each summer.

Tilos went the extra mile to go green by welcoming a private renewable power project, leaving many confused as to why the price of their energy is still rising.

“I really don’t understand why we have to pay those high bills if we have wind energy,” said Kipraios. “That’s why I have no hair,” quipped the slender man in a canary-yellow polo shirt. Other islanders are asking the same question.

The answer – that all Greek electricity consumers pay a uniform tariff for grid power no matter how much clean energy is produced in their region – is pushing the island government to launch a new solar project of its own.

It could ease the financial burden by enabling the Tilos authorities to cut local taxes and potentially allowing island residents to pay less for their power, officials said.

The sea horse-shaped island, with a year-round population of only 500, already hosts a state-of-the-art hybrid plant on municipal land with a wind turbine, a solar panel station and a battery storage system, run by Athens-based Eunice Energy Group.

But it is now contemplating forking out money from a tight budget to install publicly owned renewable-energy infrastructure in a bid to reap the full financial benefits.

The existing power plant was funded by a grant from the European Commission before Eunice Energy took ownership and began operating it commercially three and a half years ago.

Kipraios beams with pride when talking about the plant and plans to adorn his hotel entrance with a sticker from Eunice reading: “Operating on clean, green energy.”

But he’s less enthusiastic about how he is charged for his electricity now. The application of across-the-board tariffs leaves Tilos islanders vulnerable to recent price hikes in the fossil fuels that produce most of Greece’s grid power.

About 65% of the country’s electricity came from non-renewable sources like natural gas and oil in 2019, according to data from the International Renewable Energy Agency.

Greece’s uniform power tariffs, enshrined in regulation, are motivated by a desire to treat electricity as “a common good,” to which all citizens should have equal access, said Sebastian Mirasgedis, a researcher at the National Observatory of Athens.

But sanctions on oil from Russia in response to its invasion of Ukraine and reduced natural gas flows to Europe have sent energy prices soaring in Greece and other importers.

Kipraios has paid the price. His electricity bills covering November to March 2020-21 and 2021-22 show the Hotel Eleni consumed roughly the same amount of power during each period but paid four times as much in 2022.

Dimitris Cosvogiannis, who owns a nearby luxury hotel, Utopia, is equally troubled by recent high costs.

The hotel industry is feeling the pain partly because of the air-conditioning guests tend to run liberally, which drives up bills, he said.

Before opening his 10-room, three-floor boutique hotel in May, Cosvogiannis prepared a detailed business plan that estimated the cost of electricity at 5 euros ($5.12) per guest a night.

But that figure has quickly climbed to 8.5 euros – chipping away at his tight profit margins.

“We’re doing all those things – what’s in it for me?” asked Cosvogiannis, referring to Tilos’ renewable-energy push. “And we have an ugly windmill on the north end of our island.”

Plugging the gap

For now, discontent has eased a little after Greece’s energy minister said state subsidies for power bills would be extended in July to shore up households and businesses.

“The price of fuel is now too high, so the price of power is too high,” said Spyros Aliferis, Tilos’ deputy mayor, a few days before the announcement. “We have to quickly find a solution.”

Meanwhile, discussions have been fast-tracked on setting up a municipally owned and run solar-power facility with a capacity of 100-200 kilowatts next to the existing 160-kilowatt park.

The aim is to give the municipality some control over its power costs, a goal that depends on so-called “net metering.”

This system allows customers who generate their own electricity from renewables like solar or wind to cover their needs first and earn a corresponding credit on their bills.

Under Greek law, net metering would allow Tilos to consume its renewable power output in real-time but fall back on the fuel-heavy grid when the island’s production cannot meet demand.

Municipally-generated solar power would ideally cover half of residents’ and most of the town’s needs, said Eustathios Kontos, Tilos’ secretary-general.

It would, at a minimum, lower local taxes because the plant would serve all municipal infrastructure, he added.

At best, homes and businesses would be connected to its net metering scheme, obtaining some of their power through this system and, as a result, paying less for grid electricity.

Power to the people

The energy configuration Tilos is seeking – where private and public renewable power plants run in the same communities – is not yet widespread across the country.

But it is likely to become commonplace as Greece rushes to transition from fossil fuels to a cleaner energy mix, said Nikos Mantzaris, a senior policy analyst with The Green Tank, an Athens-based environmental think tank.

According to the EU statistics office, Greece tapped renewables for nearly 22% of its energy consumption in 2020, beating its goal, and aims to boost that figure to 35% by 2030.

In the northern city of Kozani, Greek Prime Minister Kyriakos Mitsotakis in April inaugurated a 204-megawatt (MW) private solar park built on public land, like that in Tilos.

Kozani also plans to create its own 6-MW solar park to cover municipal energy needs, from street-lights to city buildings, said Natasa Chatzigeorgiou, a Kozani municipality spokesperson.

When switched on, the plant should lower municipal taxes, she added. Publicly-backed installations that benefit from net metering are “the future,” Mantzaris said.

More than 1,000 “energy communities” – the legal entities behind municipal renewable power plants – have been established in Greece since a national law created the model in 2018, and they operate about 675 projects, according to a 2021 report by The Green Tank.

One crucial obstacle, however, is a general lack of spare grid capacity in Greece to transport the additional renewable power generated by the plants, said analyst Mantzaris.

But Tilos does not have this problem, noted Kontos.

The municipality said in July it had decided to work with Eunice to study the feasibility of its new solar park project.

The plan is to fund its installation at least partly with a 100,000-euro cash prize Tilos won last year for its existing plant in a European Commission competition recognising innovative and climate-friendly energy projects.

Luxury hotel owner Cosvogiannis said he could live with a little more clean energy infrastructure on Tilos, as long as it isn’t too much of an eyesore – and crucially, he said, if it “can and will produce savings for us.” [Thomson Reuters Foundation]