Greece: EIB first Recovery and Resilience Facility transaction backs a €524million landmark project with Greece’s Independent Power Transmission Operator to connect the Western and Southern Cyclades islands to mainland electrical grid
- New Recovery and Resilience Facility (RRF) loan of €108m to help finance 350km submarine connection that will boost security of energy supply in Greek islands
- Link to provide cheaper and cleaner energy and speed up rollout of renewable energy on the Western and Southern Cyclades islands
- Total cost of project is €524m, with EIB also co-financing it with an own-resources loan of EUR €157m
The European Investment Bank (EIB) and Greece’s Independent Power Transmission Operator (IPTO) have signed a long-term loan agreement of €108 million using Recovery and Resilience Facility (RRF) funds to co-finance the construction of a vital power interconnector between mainland Greece and the Cyclades islands. This agreement tops-up the EIB’s own resources loan of €157m signed on 16 December 2022.
The much-needed new electricity link consisting of five underground and submarine cables will have a total length of about 350km. The interconnector marks the fourth stage of the Cyclades project that aims to link Santorini, Folegandros, Milos and Serifos, the last islands in the Cycladic complex remaining off the mainland grid. All of the islands are located in the Western and Southern section of the Aegean archipelago.
This is the first transaction under the €5 billion mandate assigned to the EIB by Greece, sourced from the National Recovery and Resilience Plan, known as “Greece 2.0”. The mandate aims to further leverage EIB resources and support more private sector investment and thus close the investment gap ailing the Greek economy in the aftermath of the financial crisis and the Covid-19 pandemic.
“The implementation of the 4th phase of the Cyclades islands interconnection with the mainland electricity grid – a project amounting to a total cost of €524m –, using the Recovery and Resilience Facility’s co-financing, as well as today’s loan agreement between the European Investment Bank and IPTO, is expected to have a major contribution to safeguarding the energy security of Greek islands. This is an investment which significantly upgrades Greece’s energy infrastructure and supports the improvement of the energy mix in favour of renewable sources, while promoting the country’s economic growth and improving the living standards for our citizens in the Cyclades islands,” said Christos Staikouras, Greece’s Minister of Finance and EIB governor.
“Through the opportunities provided by the Recovery and Resilience Fund, important initiatives are implemented that improve everyday life for the ordinary Greek citizen. A typical example is the signing of today’s agreement between EIB and IPTO regarding the submarine connection of the Western and Southern Cyclades with the mainland electricity grid by using RRF funds. This vital project has multiple benefits for the islanders, such as access to reliable, cheap and clean energy,” said Theodore Skylakakis, Greece’s Deputy Minister of Finance responsible for preparing and coordinating the implementation of the Greece 2.0 plan.
“Today’s agreement highlights how EIB loans can be seamlessly blended with RRF financing to maximize impact for the benefit of citizens in Greece and across Europe. We want to ensure that recovery from the pandemic-induced economic slump also delivers climate action, harnesses digital opportunities and accelerates the energy transition,” said Christian Kettel Thomsen, the EIB’s Vice President responsible for lending in Greece.
“IPTO, supported by the EIB and the RRF, is implementing a significant interconnection project in the south-western Cyclades which will maximize energy security and pave the way for increased RES penetration. With this and more projects included in our 5-billion-euro investment plan until 2030, we create the new generation of electrical grids throughout Greece and promote energy transition”, said Manos Manousakis, IPTO Chairman and CEO.
“The agreement is an emblematic investment for the electrical interconnection of the Cyclades with the continental grid that contributes both to the independence from fossil fuels and to ensuring a stable and uninterrupted supply of energy to our islands, a crucial condition for the improvement of the daily life of the islanders, the hospitality of visitors that generally supports economic development. However, we are also very pleased with today’s signing between the European Investment Bank and IPTO as it is the first loan agreement concluded by the EIB as a partner of the loan component of Greece 2.0 and the first to conclude using the resources of the Recovery Fund at European level,” said Nikos Mantzoufas, RRFΑ Governor.
EIB helping to power the energy transition in Greece
The total cost of the project is €524m, receives €164.5 m grant from the RRP Greece 2.0 and is also financed by the project sponsor’s own contributions. The connection will allow the phase down of independent island systems that currently rely on more expensive, polluting oil-based generation capacity, delivering significant economic benefits, including cheaper and cleaner energy for citizens, while also supporting regional development and cohesion. The project works, including the construction of four GIS substations on the islands, will be rolled out by 2025, with preliminary activities such as design, permitting, and part of land acquisition having already taken place between 2018 and 2021. The construction of Santorini-Naxos interconnection commenced in the first half of 2022 and at the end of the year the tenders for the interconnections of Folegandros, Milos and Serifos were completed.
Independent Power Transmission Operator
IPTO is the operator of the Hellenic Electricity Transmission System (HETS). IPTO’s mission is to assure Greece’s supply with electricity in a safe, efficient and reliable manner, promoting free competition in the Greek electricity market, while ensuring the equal treatment of HETS users.