Greece has secured approval for a €2.3 billion programme aimed at decarbonising its islands, with Athens directing more than €2 billion towards electricity interconnections, renewable generation and storage as it accelerates the replacement of oil-fired power. The approval was granted by the European Commission and the European Investment Bank.
Funding split across interconnections, renewables and supporting infrastructure
The programme allocates about €1.1 billion to electricity interconnections and related infrastructure across the Dodecanese, Cyclades and North Aegean. A further €977 million is earmarked for renewable-energy projects combined with storage.
Additional components include €200 million for multipurpose dams and reservoirs and €56 million for electric-vehicle charging infrastructure. The grid-focused scale is described as making the programme more significant than a conventional renewable-support package.
Island power system upgrades and reduced reliance on oil generation
Many Greek islands have historically depended on isolated electricity systems supplied largely by expensive oil-fired generation. Connecting these islands to the mainland network is intended to enable cheaper generation to reach island demand while also creating new outlets for local wind and solar production.
The interconnection approach can also reduce the need to maintain thermal generation solely for security of supply. The investment programme is designed to address two constraints on island decarbonisation: insufficient transmission capacity and the limited ability of small isolated systems to absorb large volumes of intermittent renewable generation.
Role of storage, regional transition links and water infrastructure
Storage is expected to become more important as additional solar and wind capacity is connected. Batteries and other flexible assets can absorb surplus output during high-renewable periods and release electricity when generation falls, reducing curtailment and limiting dependence on fossil backup.
The strategy is also linked to Greece’s broader role in Southeast Europe’s electricity transition, with rapid expansion of solar and wind alongside investment in domestic transmission and cross-border links. Island interconnections extend this process into systems that have traditionally operated at the edge of the continental market, including projects across the Cyclades that have already reduced reliance on local oil generation.
Extending similar interconnection models towards the Dodecanese and North Aegean would increase the share of island demand entering the interconnected market. For renewable developers, the programme could open areas where generation potential has previously been constrained by weak networks, while future project value would depend increasingly on combining generation, storage and connection capacity rather than installed renewable megawatts alone.
The programme includes investment in water infrastructure intended to create potential links between energy management, water supply and climate resilience on islands where both electricity and water demand rise sharply during the tourism season. Available funding is estimated at around €2 billion, with the final amount partly dependent on the value of EU carbon allowances.
Greece’s approach is described as moving from subsidising isolated renewable assets towards financing infrastructure needed to operate a more integrated island power system, with transmission and storage placed at the centre of that shift under the €2.3 billion programme.
