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    Greece Gas Consumption Forecast


    September 20, 2021 - Fitch Solutions Sector Intelligence

     

      THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

      Greece Gas Consumption Forecast

      • 20 Sep 2021
      • Greece
      • Oil & Gas

      Key View: Greek consumption of natural gas is forecast to grow steadily through our 10-year forecast period, driven by demand from the power sector and industrial sectors. Supply of gas is set to be boosted by the coming online of the Alexandroupolis LNG terminal in 2023.

      Latest Updates
      • We are forecasting 2.0% growth in natural gas consumption between 2020 and 2021, with demand growing from 5.8bcm to 5.9bcm.
      • Through our long-term forecast, to 2030, we are forecasting an average y-o-y increase of just under 2%, rising from 5.9bcm in 2021 to 7.1bcm in 2030.
      • An ambitious and comprehensive strategy to reduce green house gas emissions and increase energy efficiency over the coming decades presents a strong upside risk to our already bullish outlook for natural gas consumption. We see upside for natural gas increases in household and industry as well as transportation.
      • The beginning of the liberalisation of the retail natural gas market, which could lead to greater price competition. However, on the wholesale market, natural gas transmission system operator, DESFA, will probably be raising its tariffs, counter-weighing downward price pressures from greater competition on the retail side.
      • Public Gas Corporation has indicated a much more domestic-market focused strategy, which will entail expanding the natural gas transmission and distribution (T&D) network to more rural centres around the country.
      Structural Trends

      The Greek government has published a comprehensive and ambitious National Strategy for Energy and Climate setting objectives to 2030 and beyond with the overarching aim of reducing Greenhouse Gas Emissions and increasing energy efficiency metrics.

      Key pillars of the new National Strategy for Energy and Climate are (i) the de-lignitisation of electricity generation by decommissioning all coal fired power capacity in Greece by 2028, (ii) new incentives for alternative fuels transportation, especially promoting EVs, and (iii) focus on energy efficiency of buildings.

      Objectives include:

      • Net Neutrality by 2050
      • Higher share of renewables in the electricity mix
      • Complete decommissioning of lignite electricity capacity by 2028
      • Higher levels of energy efficiency

      The plan presents further upside in our view to the consumption of natural gas, reinforcing our long held view that the natural gas sector in Greece will be an outperformer in terms of growth and investment prospects. We believe that with the aggressive targets on decommissioning of all lignite power capacity and increase of non-hydro renewables, expansion of reliable base load.

      We also see scope for greater use of natural gas in transportation (CNG and LNG), households and industry, where penetration remains minimal. We have not yet changed our natural gas consumption forecasts as we previously had allocated some extra capacity into the late 2020s, which now falls in line with the proposed plans. However, the upside risk to our outlook for natural gas consumption has become stronger.

      Gas Consumption Set To Increase
      Greece - Gas Production & Consumption Forecast (2019-2030)

      e/f = Fitch Solutions estimate/forecast. Source: EIA, DESFA, Fitch Solutions

      Greece has nameplate capacity of 4.5GW in natural gas power plants - about a third of total installed capacity.

      The power sector accounted for 66% of Greek natural gas consumption in 2017: 20% was consumed by households and small commercial units and the remainder was consumed by large-scale industrial users.

      List Of Gas-Fired Power Plants In Greece
      Power Plant Nameplate Capacity, MW Owner
      Thessaloniki CCGT 390 Elpedison
      Thisvi CCGT 420 Elpedison
      Heron I 147 Heron
      Heron II 435 Heron
      Agios Nicolaos CCGT 444 Protergia
      Agioi Theodori 436 Korinthos Power
      Agios Nicolaos (II) CCGT 334 Protergia
      PPC gas fired power plants in Greece 1,900 PPC
      Total 4,500
      Source: Company information, DEPA, Fitch Solutions

      With infrastructure upgrades in the domestic T&D network in recent years, as well as new projects (such as the Trans-Adriatic Pipeline) due in the coming years, there is a market share for gas on both the power generation and domestic consumption fronts.

      Gas Consumption (Greece 2019-2024)
      Indicator 2019e 2020e 2021f 2022f 2023f 2024f
      Dry natural gas consumption, bcm 5.1 5.0 5.1 5.2 5.3 5.4
      Dry natural gas consumption, % y-o-y 2.0 -2.0 2.0 2.0 2.0 2.0
      e/f = Fitch Solutions estimate/forecast. Source: DESFA, EIA, Fitch Solutions
      Gas Consumption (Greece 2025-2030)
      Indicator 2025f 2026f 2027f 2028f 2029f 2030f
      Dry natural gas consumption, bcm 5.5 5.6 5.7 5.9 6.0 6.1
      Dry natural gas consumption, % y-o-y 2.0 2.0 2.0 2.0 2.0 2.0
      f = Fitch Solutions forecast. Source: DESFA, EIA, Fitch Solutions
      This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.

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