Energy Policy 32 (2004) 865–879 Investigation of Greek wind energy market time-evolution J.K. Kaldellis* Lab of Soft Energy Applications and Environmental Protection, Mechanical Engineering Department, TEI Piraeus, Pontou 58, Hellinico 16777, Athens, Greece Abstract An integrated, time-depending computational frame concerning the economic behaviour of wind energy applications in Greece is developed. This frame is accordingly used to analyse the local wind energy market situation during the last 15 years. According to the results obtained, one may-on pure economic basis-explain the evolution of wind energy applications in the three major Greek sections presenting interest for wind power stations construction, i.e. the small medium sized Aegean Archipelago islands, the Crete Island and the windy sites of mainland. Furthermore, the proposed model predicts no additional wind parks in the Aegean Sea Islands and Crete. The only solution to this negative evolution is the development of additional energy storage systems, e.g. wind- hydro stations. On the contrary, the Greek mainland opportunities in selected windy sites are more encouraging under the preconditionofstrengtheningtheexistingelectricitytransportationnetworksandproperlyhandlingtheincreasingpublicannoyance towards new large wind turbines erection in relatively few closed areas. r 2003 Elsevier Ltd. All rights reserved. Keywords: Wind energy market; Time-dependency; Economic behaviour 1. Introduction Greece, and more precisely the Aegean Archipelago, has an excellent wind potential, as in many regions, the annual mean wind speed at 10m height exceeds the 10m/s. Additionally, the electricity production cost of almostalltheautonomouspowerstations(APS)usedto fulfil the electricity demand of the local societies in the Aegean Archipelago regions is extremely high, while the mean production cost of Greek APS approaches the 0.15Euro/kWh, Fig.1. Finally, Greece’s significant dependency on imported fuel (i.e. the 65–73% of its domestic energy consumption is imported) leads to a considerable exchange loss, especially with countries outside the EU (Kaldellis and Kodossakis, 1999). Considering the above-presented reasons associated with the encouragement of the EU (expressed via important financing), the Greek State began its wind energy development plan in early 1980s (Kodossakis and Kaldellis, 1998). On top of that, the Greek government voted for several ‘‘Development Laws’’ since 1982, see Table1, defining a remarkable subsidiza- tion (g ¼ 40–60%) for the wind power applications in Greece. Finally, in October 1994, the Greek parliament approved the new Renewables’ law (2244/94) allowing the private investors to produce electricity by wind parks, while Greek PPC is ‘‘obliged’’ to purchase this electricityproductionatafixedpercentage(e.g.90%for the islands) of the corresponding market price. Despite all these positive incentives the wind power increase during the 1994–1999 period was discouraging, whileatthemeantimetotalEuropewindpowercapacity annual expansion rates exceed the 30%. Only recently (2000) a remarkable acceleration of new wind park installations is encountered, although the expected electricity market liberalization is going to drastically change the situation in the local market (Kaldellis and Gavras, 2000). Even so, this explosion of new installations is focused in only two distinct regions, i.e. East Crete and S. Euboea. Thus, the maximum wind penetration is achieved, in order not to jeopardise the local grid stability, while the NIMBY (Not In My Back Yard) syndrome appears due to the remarkable number of ‘‘huge’’ wind turbines concentrated in relatively closed areas (Kaldellis, 2001b). ARTICLE IN PRESS *Corresponding author. Tel.: +30-2109619972; fax: +30- 2109641579. E-mail address: jkald@teipir.gr (J.K. Kaldellis). 0301-4215/03/$-see front matter r 2003 Elsevier Ltd. All rights reserved. doi:10.1016/S0301-4215(03)00013-2