- A new loan from the Recovery and Resilience Facility (RRF) of €108 million will help finance the submarine interconnection with cables with a total length of 350 km, strengthening the security of energy supply in the Greek islands.
- The new network will offer cheaper and cleaner electricity and accelerate the penetration of renewable energy sources in the western and southern Cyclades.
- The total cost of the project amounts to 524 million euros and the EIB is co-financing the project with its own resources of 157 million euros.
The European Investment Bank (EIB) and the Independent Power Transmission Operator (IPTO) of Greece have signed a €108 million long-term loan agreement, based on funds from the Recovery and Resilience Facility (RRF), which will help finance the construction of the vital electrical interconnection between mainland Greece and the Cyclades. The contract is a further step to the €157 million loan signed on December 16, 2022 from the EIB’s own resources.
The much-needed new electricity transmission network consists of five underground and underwater cables with a total length of 350 km. The interconnection is the fourth stage of the Cyclades project which aspires to connect Santorini, Folegandros, Milos and Serifos, the last islands of the Cyclades complex that remain cut off from the mainland network.
This first financing operation is part of the financing mandate that Greece assigned to the EIB for the management of resources amounting to 5 billion euros from the National Recovery and Resilience Plan, also known as “Greece 2.0”. The mandate aims to further mobilize EIB investments and support more private sector investments to fill the investment gap in the Greek economy following the long-term financial crisis and the Covid-19 pandemic.
“The implementation of the 4th phase of the electrical interconnection of the Cyclades with the mainland grid - a project with a total budget of 524 million euros - through the co-financing of the Recovery and Resilience Fund, as well as through the current loan agreement between the European Investment Bank and IPTO, is expected to contribute decisively to the shielding of the energy security of the Greek islands. It is an investment that significantly upgrades the energy infrastructure of Greece, supports the improvement of the energy mix in favour of renewable sources, while promoting at the same time the economic development of the country and improving the standard of living of our fellow citizens in the Cyclades”, said Christos Staikouras, Minister of Finance and member of the board of directors of the EIB.
“Through the opportunities provided by the Recovery and Resilience Fund, important initiatives are implemented that improve the everyday life of Greek citizens. A typical example is the signing of today’s agreement between EIB and IPTO for the submarine connection of the Western and Southern Cyclades, with the mainland electricity grid, utilizing resources from the Recovery and Resilience Fund. This vital project will bring multiple benefits to the islanders, such as their access to reliable, cheap and clean energy”, said Theodoros Skylakakis, Deputy Minister of Finance in charge for the preparation and coordination of the implementation of the National Recovery and Resilience Plan “Greece 2.0”.
“Today’s agreement proves that EIB loans can be harmoniously combined with the RRF’s financial resources, maximizing the impact for the benefit of Greek and European citizens. We wish to ensure that the recovery from the economic downturn caused by the pandemic supports climate action, takes advantage of digital opportunities and accelerates the energy transition, among other things,” said Christian Kettel Thomsen, EIB Vice-President responsible for lending in Greece.
“IPTO, with the financial support of the European Investment Bank and the Recovery and Resilience Fund, is connecting the southwestern Cyclades with mainland Greece, an important project that will maximize energy security and pave the way for more green energy. With this and the rest of the projects in our investment program, amounting to 5 billion euros until 2030, we are creating the new generation of electricity grids throughout the country and contributing to the energy transition”, said Manos Manousakis, Chairman and CEO of IPTO.
“Strengthening electricity transmission networks is crucial to maintain the momentum of green growth and achieve the goals of the National Energy and Climate Plan. The European Investment Bank and the Recovery and Resilience Fund, with their financial support, contribute to IPTO’s significant investment in the electrical interconnection of the Cyclades with the mainland,” said Alexandra Sdoukou, Secretary General of Energy and Mineral Raw Materials.
“Today’s agreement is a landmark investment for the electrical interconnection of the Cyclades with the mainland grid that contributes both to the weaning off of fossil fuels and to ensuring a stable and uninterrupted energy supply to our islands, a critical condition for improving the daily life of the islanders and the hospitality offered to visitors which generally supports economic development. However, we are also particularly happy about today’s signature of the agreement between the European Investment Bank and IPTO as it is the first loan agreement concluded by the EIB as a partner of the Greece 2.0 loan program and also the first to be concluded using resources from the Recovery Fund at the European level,” said Nikos Mantzoufas, Governor of the RRF.
The EIB plays a decisive role in Greece’s energy transition
The total cost of the project amounts to 524 million euros and is co-financed by RRF grants and by the project promoter’s own contributions. The interconnection will enable the island’s independent power systems, which currently rely on more expensive, polluting oil-fired power plants, to be decarbonized, offering significant economic benefits, including cheaper and cleaner energy for citizens, while supporting regional growth and cohesion. The project works, including the construction of four GIS technology substations on the islands, will be carried out by 2025, while preliminary activities such as planning, authorization and partly land purchase were carried out from 2018 to 2021. The construction of the Santorini-Naxos interconnection began in the first half of 2022, and the tender procedures for the Folegandros, Milos and Serifos interconnections were completed in the end of the year.