Greece’s power system is undergoing a profound transition, characterized by accelerating renewable energy penetration, the strategic management of legacy fossil fuel assets, and the challenge of integrating its fragmented island networks. As the country looks toward 2026, its energy landscape is being reshaped by major infrastructure projects—including new interconnectors and potential hydrocarbon developments—which could solidify its emerging role as a pivotal energy hub in the Eastern Mediterranean.¹
1. Installed Capacity and Evolving Generation Mix
By the end of 2024, Greece’s total installed electricity generation capacity reached approximately 27 gigawatts (GW). Renewable energy sources (RES), including large hydropower, constituted the dominant share of this capacity at around 24.3 GW, while fossil fuel capacity—now primarily natural gas—was reduced to about 2.5–3 GW.² This structural shift was reflected in the 2024 generation mix, where renewables and large hydro supplied just over 50% of annual electricity demand, with natural gas covering most of the remainder and lignite generation continuing its sharp decline.³
2. The Critical Path for Greek Islands
A significant number of Greek islands remain non-interconnected (NII), relying on expensive, high-emission local diesel and oil-fired power plants.⁴ In 2024, electricity generation from oil products on these islands was substantial, estimated at approximately 3,860 gigawatt-hours (GWh).⁵ A transformative milestone was reached in 2025 with the completion of the Great Sea Interconnector, the subsea high-voltage cable linking Crete to the mainland grid.⁶ This project is expected to end Crete’s reliance on oil-fired generation, enable large-scale renewable integration on the island, and reduce overall system costs. Further interconnections for other island groups are in advanced planning stages, marking a clear policy priority to phase out diesel dependency.⁷
3. Offshore Hydrocarbon Exploration: A Renewed Focus
In a notable strategic shift, Greece formally relaunched its offshore hydrocarbon licensing round in early 2025, initiating procedures for blocks in the Ionian Sea and south of Crete.⁸ Major international energy companies, including Chevron and HELLENiQ Energy, have submitted expressions of interest.⁹ This renewed exploration activity, part of a broader regional trend, is officially framed as enhancing national and European energy security but presents a complex policy challenge in balancing near-term supply interests with long-term EU decarbonization objectives.¹⁰
4. Subsea Gas Pipeline Projects: Geopolitical and Commercial Proposals
Several major subsea gas pipeline projects remain active in planning, though all face significant hurdles:
· The EastMed Pipeline: This ambitious EU Project of Common Interest (PCI) aims to link gas resources from the Eastern Mediterranean to Greece and Italy. It remains on policy agendas but faces unresolved political, deep-water technical, and commercial financing challenges, with a Final Investment Decision (FID) not yet in sight.¹¹
· Cyprus to Egypt Routes: As a more modular alternative, Chevron and regional governments are progressing with seabed surveys and planning for pipelines to connect Cypriot gas fields (e.g., Aphrodite) to existing LNG export infrastructure in Egypt.¹²
Outlook for 2026: While these projects enhance Greece’s potential role as a gas corridor, they are expected to remain in the planning and consultation phase throughout 2026, with development timelines extending well into the next decade.
5. Subsea Electricity Cables: Building the Mediterranean Grid
Electricity interconnectors are advancing more rapidly, positioning Greece as a future green electricity corridor:
· Great Sea Interconnector (Crete Link): Its physical completion in 2025 is a cornerstone achievement. Full operation will be a key focus for 2026, enabling renewable energy exchange and providing critical security of supply for Crete.¹³
· EuroAsia Interconnector: This planned HVDC link (Israel-Cyprus-Crete) is a strategic EU priority. The project continues its staged development, with the Crete-Cyprus segment being the next major phase following the Crete-mainland link.¹⁴
· Greece-Egypt Interconnector: This high-capacity cable project, designed to transmit solar and wind power from North Africa to Europe, has gained high-level political support and is advancing within EU partnership frameworks.¹⁵
Outlook for 2026: The sector will focus on commissioning the Crete link and overcoming the persistent legal, procurement, and regulatory complexities that challenge large-scale multi-national cable projects.¹⁶
6. Cross-Border Electricity Flows: The Emergence of a Net Exporter
A defining market shift occurred in 2024, as Greece became a net exporter of electricity, recording a surplus of approximately 307 GWh. Italy emerged as the primary export destination, while Bulgaria was the main source of imports.¹⁷ With existing cross-border transmission capacity of about 2.8 GW and significant upgrades planned, the increasing share of variable renewable generation is set to reinforce Greece’s role as a strategic exporter, particularly during periods of high RES output in Southern Europe.¹⁸
7. Policy and System Implications for 2026
The coming year will demand focused policy action on several fronts:
· Island Integration: Maximizing the benefits of the new Crete interconnection and accelerating plans for other islands will be crucial for reducing system costs and emissions.
· Grid Flexibility: The growing mismatch between daytime solar generation and evening peak demand will intensify the need for investment in grid-scale storage, demand-side response, and flexible natural gas generation.
· Strategic Balancing: Policymakers will need to navigate the dual track of promoting renewable energy exports via subsea cables while managing the geopolitical and economic implications of renewed offshore gas exploration, ensuring a coherent long-term transition strategy.
Footnotes
¹ Greek Energy Market Report 2025 – IPTO / HAEE analysis. https://energymarketreport.energytransition.gr/media/w3kbs214/greek-energy-market-report-2025_final.pdf.
² Ibid.
³ “Greece was a net exporter of energy in 2024,” eKathimerini, 30 Jan 2025. https://www.ekathimerini.com/economy/energy/1260170/greece-was-a-net-exporter-of-energy-in-2024/.
⁴ Regulatory Authority for Energy (RAE) report on Non-Interconnected Islands, 2024.
⁵ Data derived from IPTO and RAE operational reports, 2024.
⁶ “Work complete on undersea power cable linking mainland with Crete,” Euronews / AP, May 2025. https://www.euronews.com/my-europe/2025/05/26/work-complete-on-undersea-power-cable-linking-mainland-with-crete-greece-says.
⁷ IPTO Ten-Year Network Development Plan (TYNDP) 2025-2034.
⁸ “HEREMA announcement — start of licensing process for new hydrocarbon concessions,” Jan 2025. https://herema.gr/start-of-licensing-process-for-new-concessions-for-hydrocarbon-exploration/.
⁹ “Chevron confirms interest in offshore hydrocarbon exploration south of Crete,” eKathimerini, Mar 2025. https://www.ekathimerini.com/economy/energy/1265202/chevron-confirms-interest-in-offshore-hydrocarbon-exploration-south-of-crete/.
¹⁰ “Europe’s drilling comeback challenges US energy pledges,” Reuters, Dec 2025. https://www.reuters.com/markets/commodities/energy/europes-drilling-comeback-challenges-us-energy-pledges-2025-12-01/.
¹¹ “EastMed pipeline remains on EU’s new list of common interest projects,” Pipeline Journal, 2024. https://www.pipeline-journal.net/news/eastmed-pipeline-remains-eus-new-list-common-interest-projects.
¹² “Chevron to survey East Mediterranean seabed for pipeline linking gas field to Egypt,” Associated Press, 2025. https://apnews.com/article/69db325fbe30f7240319952371f2c42f.
¹³ Euronews / AP, May 2025 (Op. Cit.).
¹⁴ “Euro-Asia submarine electricity interconnection cable,” European Commission. https://international-partnerships.ec.europa.eu/policies/global-gateway/euro-asia-submarine-electricity-interconnection-cable_en.
¹⁵ Joint Declaration on the Greece-Egypt Electricity Interconnection, 2024.
¹⁶ “European prosecutors probe East Med cable project, says Cyprus,” Reuters, Sep 2025. https://www.reuters.com/markets/commodities/european-prosecutors-probe-east-med-cable-project-says-cyprus-2025-09-04/.
¹⁷ eKathimerini, 30 Jan 2025 (Op. Cit.).
¹⁸ IPTO TYNDP 2025-2034 (Op. Cit.).