Greece’s pledge to cut electricity costs by 30% between 2027 and 2029 is facing an increasingly difficult reality as surging international energy prices threaten to offset much of the relief planned by the government.
The challenge is becoming more acute with European natural gas trading at €72.77 a megawatt-hour and oil around $90 a barrel. For Greece, where gas-fired plants remain critical to meeting electricity demand and often determine wholesale prices, the international energy backdrop could prove decisive.
Prime Minister Kyriakos Mitsotakis has outlined a package that includes a 50% reduction in Public Service Obligation charges, the removal of municipal fees from electricity bills, subsidies for heat pumps and batteries, incentives for small-scale solar installations and measures to strengthen competition among power suppliers.
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Energy Minister Stavros Papastavrou is expected to provide further details on the plan. The bigger question, however, is whether these measures can produce a genuine 30% reduction in what households and businesses actually pay for energy within three years.
The planned 50% cut in Public Service Obligation charges from January 2027 illustrates the difficulty. These regulated charges account for roughly 3% to 4% of an average household electricity bill. Cutting them in half would therefore reduce the final bill by only around 1.5% to 2%.
The removal of municipal charges from electricity bills from 2028 presents another issue. It will make power bills look smaller, but it won’t eliminate the cost for households. Municipal fees will continue to be collected through a separate mechanism.
Subsidies for heat pumps, solar water heaters and batteries could deliver more substantial savings by reducing consumption. But they don’t lower the underlying price of electricity and primarily benefit consumers able to invest in such equipment.
The biggest uncertainty comes from wholesale energy markets. At current gas prices, generation costs are under renewed pressure. A sustained period of expensive gas could easily absorb savings created by reductions in regulated charges. Oil at $90 a barrel adds broader inflationary pressure and reinforces the vulnerability of a three-year electricity-price target to forces Athens can’t control.
There are also questions about how effectively Greece’s growing renewable-energy capacity is translating into lower consumer prices.
A recent investigation by Greece’s energy regulator, RAAEY, into an unusual decline in solar generation during periods of strong sunshine in August has intensified scrutiny of the market. At times when abundant solar production might have been expected to push wholesale prices toward zero, electricity was still trading at close to €100 a megawatt-hour.
Market participants have suggested that some producers may voluntarily reduce output to avoid negative prices. If confirmed, it would demonstrate a central problem in Greece’s energy transition: more cheap renewable generation doesn’t automatically mean cheaper electricity for consumers.
Without stronger wholesale-market oversight, more battery storage, better international interconnections, lower balancing costs and action against electricity theft, savings from government interventions could quickly disappear.
Athens can reduce regulated charges and subsidize efficiency investments. It can’t control global gas and oil prices or geopolitical shocks.
