While energy markets across Europe have begun to stabilize following the disruptions of 2021 and 2022, Greece continues to experience electricity prices well above the European Union average. This ongoing disparity has drawn attention from EU officials, including Energy Commissioner Dan Jørgensen, who acknowledged the issue and suggested that European support may be considered.
The high cost of electricity in Greece is not merely a result of temporary market conditions. Instead, it reflects deeper structural problems within the country’s energy system, which have prevented consumers from benefiting fully from declining international natural gas prices and an increasing share of renewable energy sources.
A key factor is Greece’s limited energy interconnection with the rest of Europe. Its geographical position and underdeveloped transmission infrastructure isolate it from the more competitive and often cheaper electricity markets of Central and Northern Europe. Although Greece maintains cross-border connections with countries like Bulgaria and Italy, these links have limited capacity, restricting the flow of more affordable energy into the country.
Greece’s electricity pricing model also contributes to elevated consumer costs. The system operates on a “marginal pricing” mechanism, where the final price of electricity is determined by the most expensive energy source required to meet demand—usually gas-fired power plants. As a result, even if a significant portion of electricity is generated from lower-cost renewable sources, the market price remains tied to the costliest conventional source.
Further complicating matters are constraints within Greece’s national transmission grid. In regions with abundant renewable energy generation, such as the northern mainland and various islands, insufficient grid capacity hampers the transfer of this energy to areas with higher demand. This inefficiency leads to underutilized renewable resources and increased overall system costs.
Natural gas remains central to electricity production in Greece, with the country relying heavily on imported liquefied natural gas (LNG). Unlike other EU nations with access to multiple pipeline gas sources, Greece’s dependency on LNG exposes it to global price volatility and geopolitical risks. This has a direct impact on households, which face high energy bills, and on industries, especially energy-intensive sectors that must contend with rising operating costs. As a result, Greek manufacturers find themselves at a disadvantage compared to competitors in countries with lower energy prices.
At the European level, efforts are underway to reduce these disparities. One major initiative is the integration of the EU’s internal energy market, which includes expanding cross-border electricity connections and modernizing national grids. Funding through programs like the Connecting Europe Facility (CEF-Energy) is being directed toward key infrastructure projects, including improvements to the Greece–Bulgaria and Greece–Italy energy corridors, as well as the construction of new transnational links.
To support businesses, the EU is also exploring additional policy tools such as co-financed state aid, compensation schemes aligned with the Carbon Border Adjustment Mechanism (CBAM), and fixed-price contracts for renewable electricity known as Contracts for Difference, which aim to stabilize costs for producers and consumers alike.
Greece’s challenge with high electricity prices highlights broader issues related to energy market integration within the EU. Addressing these challenges will require sustained investment, regional cooperation, and structural reform to ensure a more competitive and resilient energy future for the country.
