VIP Shipper Club story – Riding the Thermals

ISSUE 2 / 2018

THE PUBLICATION FOR THE INDUSTRIAL PROJECT SUPPLY CHAIN INDUSTRY

ISSUE 2 / 2018

RIDING THE THERMALS

Greek Wind Energy Sector To Soar

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IBERDROLA RENOVABLES ..................................................... page 26 ENEL GREEN POWER .................................................................... page 26 LM WIND POWER (SUBSIDIARY OF GE RENEWABLE ENERGY) .......................................... page 28

ENERGY UPDATE

Greek Wind Energy Sector To Soar

RIDING THE THERMALS

BY ANDREW WILLIS

J

ust as Greek winds helped propel Jason and the Argonauts on their epic voyage to find the Golden Fleece thousands of years ago, today the same gusts are driving the southern European country’s wind energy industry.

Total installed capacity of wind power in Greece reached 2,500 megawatts in the fourth quarter of 2017, according to figures from the Hellenic Wind Energy Association. That compares with 850 megawatts a decade ago and less than 40 megawatts 20 years ago.

“The wind sector has evolved significantly over the past 10 to 15 years from a practically non-existent industry to a mature one,” Minas Kitsilis said, “and I’m confident the growth will continue.” Kitsilis is a senior associate with Norton Rose Fulbright, a legal firm that has advised banks providing funding to wind projects in Greece.

A number of factors appear to be driving the sector’s impressive growth, including ambitious national

Minas Kitsilis, Norton Rose Fulbright

26 BREAKBULK MAGAZINE www.breakbulk.com

and European Union targets to reduce carbon dioxide emissions and increase the amount of electricity being generated from renewable sources.

Greece’s improved macroeconomic situation is also spurring wind investments. The country suffered a severe crisis following revelations in 2009 that government debt and deficit levels has been underreported, sparking a loss of confidence and higher borrowing costs for the government that proved unsustainable. The country was forced to receive bailout loans in 2010, 2012 and 2015 from the International Monetary Fund, the Eurogroup and the European Central Bank, provided on condition that Greece correct structural weaknesses in its economy.

The resulting reforms included government spending cuts and tax increases, leading to a loss of income and worse living conditions for many Greeks that sparked occasional riots and nationwide protests. After years of recession, the economy finally returned to growth in 2017, and is forecast to keep growing this year, spurring the construction of new wind parks as energy consumption increases.

The projects are proving to be a fillip to breakbulk shippers transporting turbines and other machinery from manufacturers in countries including Denmark, Germany and Spain.

“There are no wind turbines being manufactured in Greece, so they’re all imported,” Kitsilis said.

“Another 500 wind turbines will need to be shipped into Greece during the next couple of years. This has resulted in a new market evolving alongside the wind industry itself.”

KEY PLAYERS

Companies with operating wind parks across Greece include the renewable subsidiaries of two major construction groups – Terna Energy of GEK Terna Group and Eltech Anemos of Ellactor Group. The list of key players also includes renewable subsidiaries of three major European utilities: EDF EN Hellas, Iberdrola Renovables and Enel Green Power.

Last year, Enel Green Power started construction of the Kafireas wind power complex located on the southern part of Evia island, close to Athens and a popular destination for Greek holidaymakers. Once completed, the new facility will have a total installed capacity of 154 megawatts and will be the country’s largest wind farm.

Kafireas is expected to enter into operation in the first quarter of 2019 and will feature a high voltage interconnection line to the mainland comprising overhead, submarine and underground cables. The complex will generate enough energy to supply about 129,000 Greek households, while avoiding the emission of nearly 433,000 tons of CO2 each year, the company says.

Amid all the optimism and recent growth however, it’s worth remembering that Greece still remains a small player in the wind energy sector, far behind many other jurisdictions.

ISSUE 2 / 2018

THE WIND SECTOR HAS EVOLVED SIGNIFICANTLY OVER THE PAST 10 TO 15 YEARS FROM A PRACTICALLY NON-EXISTENT INDUSTRY TO A MATURE ONE.” – Minas Kitsilis, Norton Rose Fulbright

CREDIT: SHUTTERSTOCK

www.breakbulk.com BREAKBULK MAGAZINE 27

ENERGY UPDATE

Enel Green Power, for example, develops and operates renewable energy projects across the globe, with a presence in Europe, the Americas, Asia, Africa and Oceania.

Its installed wind capacity is about 3 gigawatts in the U.S., 2 gigawatts in Spain and 1 gigawatt in Italy, the company says. In comparison, it manages a mere 200 megawatts of wind power in Greece.

COAL DEPENDENCE

The existence of coal deposits in Greece has contributed to the relative underdevelopment of its wind industry. The country remains heavily reliant on coal for much of its electricity production, and still has an active coal mining industry and vocal lobby supporting the fossil fuel.

The country’s location on the periphery of Europe, where it is less well connected to supranational grids, is also seen as a hurdle.

Another is its fragmented and mountainous topography, with thousands of islands scattered in the Ionian and Aegean seas, making it harder to construct wind farms and distribute the electricity.

Ironically, it is these mountains and long coastline that provide Greece with its large wind energy potential. As well as the transportation of wind turbines, projects to improve the connections between mainland Greece and its many islands proffers to be another boon

for companies transporting and installing undersea cables and other equipment in the coming years, according to the Hellenic Wind Energy Association, or HWEA. “Greece is at the edge of Europe, so we face some technical challenges,” said Panagiotis Papastamatiou, CEO of HWEA, which is the main body representing Greece’s wind industry. “The infrastructure we need to meet renewable targets is also driving investments.”

One innovative project Panagiotis that involved Papastamatiou significant infrastructure HWEA hurdles was the development of a wind farm on Greece’s St. George Island, located in the sea area south of Cape Sounio.

The project, developed by Terna Energy with a capacity of 73.2 megawatts, incorporates a submarine connection between the uninhabited island and the continental system.

The project is described by its developers as the first onshore wind park with characteristics of an offshore wind park, using the island’s location to exploit the high wind potential of the Aegean Sea.

FLEXIBILITY TO CAPITALIZE ON GROWTH Coli Schiffahrt & Transport is one breakbulk specialist that has experience transporting equipment to Greece’s wind energy industry, including machine heads, blades and towers from manufacturers in Germany.

Shipping wind turbines requires a high degree of precision, coordination and special equipment, including onboard cranes and port facilities. Greece’s ports are up to the task however, and Coli has not experienced problems offloading breakbulk goods for clients there.

And while the southern European country’s wind industry remains small, there’s “no doubt” that its continued growth will benefit shippers including Coli which counts several major wind producers among its clients, said Alain Akavi, director of the company’s Bremen office.

Flexibility and alertness to changes in the industry will be key to the success of shippers. Traditional transit routes from wind turbineproducing countries in northern Europe to Greece may gradually change as new players enter the market, opening new routes for breakbulk transporters.

For example, LM Wind Power, a subsidiary of GE Renewable Energy, announced the start of production at its wind turbine blade factory in Turkey last year where it has about 450 technical employees.

“Turkey now has a big production of windmill blades,” Akavi said. “Being a neighboring country of Greece, this makes the transit time very short and potentially cost effective.”

Eltech Anemos Wind farm at Gropes-Raxi Gkioni, Greece, with a capacity of 18.9 megawatts. / CREDIT: ELTECH ANEMOS 28 BREAKBULK MAGAZINE www.breakbulk.com

CREDIT: SHUTTERSTOCK

ISSUE 2 / 2018

HEAVY LIFT LEADERS.

ENERGY UPDATE

LEFT: Enel Green Power’s 6.4-megawatt

wind farm Monastiri I.

RIGHT: Enel Green Power’s 6-megawatt wind

farm Martino. Enel Green Power is present in Greece with 308 megawatts of installed wind capacity, solar and hydro power.

CREDIT: ENEL GREEN POWER

The wind park constructed on the island is an autonomous electricity production unit, connected to the National Transmission System via a new substation that was also constructed on St. George Island and located near the wind generators. The wind farm will

supply energy to the National Transmission System via the submarine cable connection ending at the Mikro Lavrio substation.

Not every windy island is suitable for the development of wind parks however. In the case of the uninhabited

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ISSUE 2 / 2018

St. George Island, the first project of its kind in Greece, a small harbor had to be built to receive the wind turbines. Other locations are so remote that developments there may remain unviable for years to come.

“The economics of the project supported the installation of a harbor and other infrastructure to transport the turbines,” Papastamatiou said of the wind park on St. George Island. “The morphology of Greece, its many islands, creates some constraints. Each project needs to be examined case by case.”

wealth of data to track trends in the cost, performance, and growth of wind energy. It concluded that wind energy will continue to be one of the lowest cost electricity generation technologies available as turbines become cheaper, bigger and better.

“As long as wind energy offers good returns and security of income, I think that new money will continue

to come into the sector,” Papastamatiou said. “The potential is there for Greece to be the next success story in Europe.” BB Andrew Willis has worked as a journalist for more than a decade in countries including Argentina, Belgium and Colombia.

BRIGHT SPOTS REMAIN

Perhaps unexpectedly, much of Greece’s growth in installed wind capacity over the past decade happened right in the middle of the worst turmoil, as investors looked for safe havens to put their money.

“THE MORPHOLOGY OF GREECE, ITS MANY ISLANDS, CREATES SOME CONSTRAINTS. EACH PROJECT NEEDS TO BE EXAMINED CASE

BY CASE.” – Panagiotis Papastamatiou, HWEA

“The data shows that during the crisis years, renewables as a whole attracted significant amounts of investments,” HWEA’s Papastamatiou said. “It was considered a safe investment. Energy is a product with low elasticity.”

Now he’s confident that Greece’s return to growth and the considerable untapped potential along the Aegean Sea mean growth in installed wind capacity is ready to grow further. The ever-lower costs of producing wind energy are also an important factor driving the industry.

A U.S. Department of Energy report last year pulled together a www.breakbulk.com BREAKBULK MAGAZINE 31