While the government says it is fully satisfied with the progress made with the introduction of new RES units into the country’s electricity system, where 1,700 MW were installed in 2017 alone, surpassing all forecasts, as well as with the over-ambitious goals of the new ESEK, If we talk about 80 percent penetration of renewable energy into electricity generation until 2030, the harsh reality of the markets will shake the atmosphere of euphoria that has reigned in recent weeks.

This uncomfortable reality is overshadowed by news of a record trade deficit in 2022, which is known to be a key indicator of the health of public finances. A big thorn in the economy remains the widening current account deficit recorded in 2022, as it fuels fears of a return to the so-called “double deficit”.

According to the relevant data of the Bank of Greece published last week (20/2), the foreign trade deficit in 2022 reached 20.1 billion euros, an increase of 7.9 billion euros compared to 2021. and natural gas amounted to approximately 30.8 billion in 2022, i.e. 14.7 billion more than in 2021. Very positive was the increase in fuel exports, which reached 17.6 billion compared to 10.2 billion in the previous year. It is worth noting that due to its advantage in refining, Greece has the largest export of petroleum products in Southeast Europe.

Thus, net fuel imports reached $13.2 billion, which corresponds to 66% of the foreign trade balance. If we add to this number the value of net electricity imports, which in 2022 were worth approximately $2.46 billion, then the total energy imports correspond to 77.6% of the foreign trade balance!

Not wanting to underestimate the general problem with the balance of foreign trade, which this year is oriented towards a generalized wave of price increases for products of all kinds, mainly in Europe, due to high inflation, which in December 2022 “ran” at 9.2% in the EU, where the bulk of Greece’s imports come from, high fuel imports are, proportionately, the product category itself responsible for the largest percentage influencing the formation of the balance in question.

With regard to the country’s trade balance and, therefore, the balance of foreign trade, as well as GDP, what matters is not so much the rate of change in prices (i.e. inflation), but the prices at which supplies become more and more expensive. As a reminder, in 2022 we had the highest historical gas prices: TTF soared to 345 euros per MWh in August last year, while the average price in Europe last year was more than 135.8 euros/MWh, and prices for oil reached $125 per barrel for Brent with an average price for 2022 of $104.78 per barrel. These prices, while unusually high, did not dampen consumption, which declined only slightly, once again demonstrating the great inelasticity of energy prices.

The widening current account deficit raises concerns about the return of the so-called “double deficit”.

It is clear that the import of oil and natural gas once again “breaks the foreign trade balance” with adverse consequences for GDP and economic growth in general. Perhaps over the past few weeks, gas prices, and therefore electricity prices, have fallen sharply (now TTF gas is hovering around 50 euros / MWh, and Brent is 83-84 dollars per barrel), which gave optimism to the economic situation. employees, but not complacency as energy prices are highly volatile and a new geopolitical anomaly will push them back to new highs.

In any case, the decline in energy prices at the beginning of the year was welcomed by the Ministry of Finance, firstly because it limits the need for additional public financial space to subsidize electricity, and secondly because it can limit the cost of energy imports that have been overloaded in 2022. In practice, with the price of natural gas just below 50 EUR/MWh, the market has returned to the levels of the fourth quarter of 2021, with a drop of more than 70% compared to the historical highs of 2022. Of course, to reflect this drop in the country’s energy balance, and especially in the balance of foreign transactions, it will take a long time, at least six months, and without large price hikes.

Traditionally, fuel imports into Greece and the high foreign exchange fund that the country must have each year to provide it, since almost 100% of imports, are a completely negative factor for public finances. Something that got worse in 2022, as the numbers above show. Thus, the usefulness and economic benefits of developing domestic oil and gas production are once again emphasized, which, despite the ambitious European and national plans and goals for their replacement with renewable energy sources, will remain for many years to come, which form the basis of transport. , energy and industry.

Remember that today (2022) imported hydrocarbons still cover 75% of domestic energy consumption – Greece is one of the most energy dependent countries in the EU – while efforts to increase the introduction of renewable energy are limited to electricity generation. However, the electrification of the power grid is a long process that will last well beyond 2050. That is why Greece is very interested in developing its hydrocarbon deposits.

Mr. Kostis Stambolis is President and CEO of SE Energy Institute (IENE).