Launched in 2010 as a strategic partnership between Greece’s J&P Avax and Italy’s Sorgenia, Volterra has quickly grown in Greece’s newly liberalized energy market, which has seen the emergence of a host of independent power providers. With a portfolio of around 400MW of renewable energy projects in operation or under development, Volterra is an active participant in cross-border power trading, allowing electricity surpluses to be transferred where most needed. In this interview, Volterra’s CEO Panos Nikou reflects on how liberalization has transformed the energy sector, discusses Greece’s under-exploited renewable energy potential, and explains how Volterra’s joint venture with state-owned PPC Renewables could be a game-changer in opening up the sector for further partnership opportunities
As the fruit of a partnership between Avax and Sorgenia, how have you drawn on the experience of those two big names to shape how you run Volterra and its role in the energy sector in Greece?
Volterra has had the unique opportunity to benefit from two equal founding partners that are market leaders in the two activities most relevant to an energy company. The Avax Group is one of Greece’s biggest construction companies, with 35 years of experience and more than 2,750 international projects, including the Athens Metro, Queen Alia Airport in Jordan and the Trans Adriatic Pipeline. Sorgenia is one of the biggest energy companies in Europe, with extensive experience in electricity production. Sorgenia’s installed power capacity exceeds 5.6 GW and the company is among Italy’s five biggest companies in trading and retail. The business and technical knowhow of these two partners provided Volterra with a solid base to kick-start its journey to becoming a major player in the Greek energy market, just when liberalization was starting here in earnest. Apart from technical expertise, both partners brought with them a corporate culture of excellence: Avax with its deep knowledge of infrastructure projects and construction on rough Greek terrain; Sorgenia with its profound understanding of the intricacies of the development of energy projects and production management, as well as customer behavior.
I had the tremendous opportunity to be the “best man” for this successful “wedding” from its inception, bringing together trusted business partners I had known and worked with for years. I give credit to our founding partners for two of Volterra’s core values: our sustainable business growth and our focus on the consumer as the center of our activity.
How has the company evolved since its establishment and how are you innovating in Greece’s energy market?
Volterra has come a long way since our founding in 2010. Our vision back then was to become one of the top four energy companies in Greece and a key stakeholder in Greece’s sustainability shift.
Since then we have expanded in all major fields of the energy business, including production, trading and retail sales, with an annual increase of energy supplied to our customers and company turnover of 40%, while our retail market share increased by 50%. Our portfolio of projects boasts about 400 MW in various phases of maturity. Currently, we serve thousands of residential and business customers supplying them with more than 1,000,000 MWh annually. In terms of innovating, we were the first in the Greek market to offer an unprecedented level of transparency in our pricing, no time commitments and fixed costs and monthly billing. This differentiated us from most of our competitors, as well as the state-owned electricity provider. And I am grateful that, according to recent market research, customers recognize Volterra as the most trusted company.
In April 2019 Volterra signed an agreement to develop and operate wind farms with PPC Renewables, tell us more about this project and how this fits in with plans to promote green energy?
This joint-venture with state-owned energy company PPC is a major milestone not just for both parties, but also for the shift that Greece is currently undergoing towards a greener energy mix. 70% of Greece’s energy is produced by fossil fuels, of which PPC is responsible for 60%. It is evident that if we want Greece to contribute to tackling climate change, PPC’s energy mix will have to shift rapidly to more sustainable sources. That road passes through companies like Volterra. This is the first time that PPC has partnered with a private company in a project of this scale. The 60 million euro investment plan includes the operation of two 16 MW wind farms and the further construction of two wind farms of 53.7 MW with 15 wind turbines and a new substation. With construction now well underway and scheduled to start production by the end of 2020 we can now explore more joint-venture projects in the future. With so much potential for renewable energy projects in Greece, I am certain this will be the first of many partnerships, perhaps also with foreign investors.
What is Volterra’s role in cross-border power trading and what presence do you have internationally?
Cross-border power trading is an activity that is of fundamental importance for the functioning of a liberalized energy market. Since our beginning, we have placed a particular focus on this activity while growing our retail and production business. Cross-border trading helps optimize the electricity flows in European markets by allowing spare electricity to be transferred where it is most needed. This mechanism will be of fundamental importance if Europe wants to be both green and energy independent in the future. Trading also allows companies to hedge the fluctuation in the price of energy products. That benefits the final consumer through lower and more stable prices. Volterra trades in several markets of southeastern Europe and has entered into an agreement with more than five prominent counterparts, including Sorgenia & Veos from Italy, Alpiq from Czech Republic, GEN-I from Slovenia and EFT from Switzerland.
As we shift away from traditional home-grown, dirty but reliable fossil fuel sources of energy to those that depend on weather and location, and as the grid shifts to smart metering and we better understand and predict consumer needs, trading can help transfer electricity from, say, the windy hills of Greece to warm up German homes. The creation of a pan-European exchange will reduce prices by increasing competition, creating more market liquidity – which lowers risk – and mitigating the need for back-up generation.
What sets Volterra apart from its competitors?
At Volterra, we decided from the start to distinguish ourselves in two ways. The first is how we treat our customers and how we can educate them about the liberalized market. The second is in green production. We were the first to offer full price transparency in our bills – including all the fees and hidden charges. Our bills include a detailed explanation of all items in simple language. I fundamentally believe that a liberalized market will not only be achieved by open competition, but by customer education and awareness. At Volterra, we have made the strategic commitment that our production will be 100% from renewable energy. That allows us to benefit from Greece’s natural advantages in renewable energy sources that are largely unexploited. We have a great opportunity because we are in a country with the second-highest solar irradiation in Europe, and with some of the areas of greatest wind potential on the continent. Our commitment to being a green energy producer also helps Greece achieve its climate-related objectives, and also responds to customers’ expectations of a modern energy company.
What is your perspective on competition and the liberalization of the energy market?
The liberalization of the energy market in Greece has been a game-changer that has the potential to radically transform our country. Competition and multiple market players are positive as it allows the market to access the most efficient power product at the best value. It also brings fresh thinking and innovation. In particular, the introduction in June 2020 of Day-Ahead Market, Intra-Day Market and Forward products will allow suppliers and large consumers to better manage their portfolios through appropriate hedging and optimization procedures. In the context of increased global awareness about climate change and the need to reconsider our energy mix, having multiple energy companies also allows countries to find the best way to achieve that objective.
There is at the same time risk of “balkanization” in a market, especially in the early stages, with unprepared entrants entering the market to make quick wins. Attention should be paid by the monitoring and regulatory authorities to such market distortions as it is crucial to have solid market surveillance, especially in the early stages of market integration. In addition, the Hellenic Energy Exchange needs to conduct a realistic dry-run period to ease the transition from a mandatory pool to a liberalized market. Finally, it is also important to ensure market liquidity by imposing volume limits on bilateral contracts, otherwise the benefits of liberalization will be fragmented and temporary.
How can Greece raise its profile and attract investors to its energy sector?
After ten years of crisis, the Greek economy is growing again and the outlook is positive. This administration is particularly supportive of foreign investment and aims to make Greece the investment surprise of Europe. In addition, the ministry of energy has set a target to increase the generation of electrical power from renewable energy sources from 17% to 35% by 2030. Meanwhile, PPC has announced that it will cease operating its existing lignite-fired power plants of installed power of 3.4 GW by 2023, and all its lignite-fired power plants by 2028. Combined with President von der Leyen’s Green Deal, we expect faster licensing and administrative procedures, a better regulatory environment and improved financing conditions. The ministry of energy has already committed to simplifying all licensing procedures for renewable energy projects. Renewable energy projects are a low investment risk when installed in areas of high resource potential, so there are great investment opportunities with rates of return of over 10% as we have seen from our installed projects. As a result, Volterra is strategically placed to develop further opportunities. German investors would be particularly suitable partners, given their own expertise in renewables, through Germany’s ambitious Energiewende shift away from nuclear and fossil fuels. Ultimately we are all partners in European efforts to tackle climate change and this creates opportunities for partnerships.