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Energy Sector

Regional Energy Indicators:
Electricity Generation (TWh) 440.7
Electricity Consumption (TWh) 411.3

Energy Consumption per Capita (kgoe/cap) 1786
Energy Import Dependence (%) 61%
CO2 Emissions per Capita (kg CO2/cap) 5231
Note: kgoe – kg oil equivalent

Bio-fuel Business Catching On in Greece

By Ioannis Michaletos*

Greek businesses today are increasingly looking into the prospects of further investments into waste management and possible applications for the bio-fuels industry. Already, some of the bigger companies are making plans for incorporating bio-fuel production into their portfolios, and the general trend towards renewable energy sources and the generous state and European support towards that aim also add to the appeal in this sector.

The current turnover of the waste management market, according to reports from the Ministry of Development in Athens, is around 100 million Euros. Within the next 3-5 years, estimates are that it will grow to 300 million. Over the next 7-9 years, this figure is estimated to have soared to 700-800 million Euros annually. Overall, this means that at least 25 new recycling units must be constructed in the short term, and there are serious considerations calling for the investments to proceed.

The EU has repeatedly fined Greece for its inability to draft a conclusive plan regarding garbage recycling, and according to Giorgo Angelli, a journalist covering environmental issues, “that provides a strong impetus for great investments and assistance by the state in the near future for this sector.”

The Greek state has already started forming public tenders for the new waste processing installations that will be built using Private-Public-Consortiums- whereby private companies will construct the plants, and then be able to exploit them under a leasing agreement with the state.

The necessary funds for this work will derive in most respects from the EU’s 4th Assistance Package, which describes a broad array of handouts from Brussels to Greece within the period 2009-2014. Furthermore, as Christos Ioannou, an independent business consultant notes, “it is more than certain that Greek corporations will seek the collaboration of experienced foreign multinationals, since this industry is rather new to the country and the know-how deemed essential is still limited.”

The Players

The current market structure is composed of the big players in Greece, which will most certainly strive to acquire larger market shares in the future as well. The first such company, Helector, is a part of the Ellaktor construction group, which is active in multiple locations in Greece, the Balkans and the Middle East.

Another involved business, Helesi, operates a recycling plant in Northern Greece which specializes in motor tire process. Its shares are listed in the AIM stock index in London.

Third is Lobbe-Tzilalis, which constitutes a joint venture between the German group and a Greek representative that specializes in hospital waste management in Athens.

Further, the Greek construction group Hellenic Technodomiki, itself a Ellaktor affiliate, operates a household recycling plant near Athens- the first of its kind in the region. It also has a similar one in the Trier -Mertesdorf area of Germany. Recently it established a power station operating with biogas in Northern Greece. According to its press office “the company is interested in promoting this power generating technology in the country and in other markets abroad.”

Bio-Power on the Rise

The energy derived from biomass in Greece has also ignited a series of investments in the biofuel sector. Since mid-2006, the state has provided substantial subsidies of up to 50 percent of an investment, in order for plants to be created that will produce biofuel.

According to the 2003/30 EU Directive on the Promotion of the Use of Biofuels and other Renewable Fuels for Transport, Greece should conform by increasing biodiesel consumption to 5.75 percent by 2010, and 10 percent by 2020 of the total transport consumption. Currently, it is estimated at only 3 percent.

The decline of the oil price index has already cast a shadow on the viability of a multitude of investments-to-be that had at inception calculated a different price range for their bio-fuel product.

Therefore, as chemical engineer Ioannis Papamichail notes, “the annual diesel consumption in the country is approximately 2.7 million tones per annum, whilst the interest of constructing new plants will lead in theory into the production of more than 3 million tones of biodiesel. For 2008 biodiesel production was 100,000 tones so it’s far from the expectations of many prospective investors.”

It is understood that most plans will not proceed at all in the foreseeable future. If one wants to predict how the market will develop, it’s best to look at the already established businesses that have rooted themselves in the market and, in theory, can thus fend off the potential competition.

The first such company, Agroinvest, owns a plant with a maximum production capability of 252,000 tones a year. Further, the Pettas Company operates a factory in southern Greece with a total capacity of 60,000 tones. The Hellenic Biodiesel company owns an installation with a total 40,000-ton production capability in Northern Greece. Lastly, Vert Oil recently established a 44,000-ton plant suitable for such industry.

All of the above companies are Greek-owned and are likely going to be hotly pursued by larger investors which seek an entrance into the market, but do not want to establish new plants due to the limited profit margins related to the oil price decrease. An example is the joint venture named Biodiesel-Greece, created by Hellenic Petroleum and Viohalco Holdings, two of the top Greek multinationals.

Another potential strong player is the Elin Biodiesel Corporation that belongs to an energy group linked with influential Greek shipping interests. Both of them have relayed to the local press that they will proceed with investment plans that include market entrance through the already established players, and in the mid-term complete their own installations in Greece and in the neighboring Balkan countries.

*Frequent Balkanalysis.com contributor Ioannis Michaletos is a Balkan security analyst for the RIEAS Institute in Athens, Greece. He is also Southeastern European Coordinator and Editor for the World Security Network Foundation.