At a ceremony in Athens earlier representatives of the European Investment Bank (EIB) and the Independent Power Transmission Operation (IPTO) signed a EUR 178 million long-term loan to finance construction of the first power interconnector between mainland Greece and the country’s largest island Crete.

The new twenty year EIB financing will support 50% of the costs of the new electricity link. The Crete interconnector, comprising two alternating current (AC) 150kV submarine cables, will be built between the Malea peninsula in the Peloponnese and Kissamos Bay in Crete. The new cable, expected to be operational in 2020, will be up to 1000 meters below sea level and also provide telecom and internet services.

“The power link between Crete and the Peloponnese is one of the biggest projects for the coverage of the increased energy needs of Greece, with significant economic benefits and a high environmental footprint. I welcome the new initiative of the EIB which reflects the confidence it places in IPTO and the prospects of the country in general. EIB has been a long-term, valuable strategic partner for Greece and a crucial factor for the implementation of a series of important investments, both public and private, in the Greek energy sector,” said Giorgos Stathakis, Minister of Environment and Energy of the Hellenic Republic.

“The European Investment Bank is committed to supporting transformational energy in Greece and we are pleased to support this visionary EUR 350 million project essential to increase use of clean energy. Today’s agreement is a milestone for the new Crete interconnector, one of the longest submarine power links in the world, that will benefit Greek consumers and help to tackle climate change,” said Andrew McDowell, European Investment Bank Vice President responsible for Greece and global energy financing.

“We are very proud that during our tenure, the biggest –so far- project in the history of the Greek Electricity Transmission System is being implemented. The Crete-Peloponnese interconnection exemplifies the benefits of the island interconnections, which are a top priority of IPTO and its main shareholder, the Hellenic State. The support of EIB –which is currently financing another emblematic project in progress, the Cyclades Interconnection, is of crucial importance and we are looking forward to the deepening of our long-term cooperation,” said Manos Manousakis, Chairman of the BoD and CEO of IPTO.

At present electricity on the island is primarily generated by oil-powered plants using imported fuel oil. Once operational the new interconnector is expected to supply between 34 and 40% of electricity used on Crete and enable access to renewable energy generated elsewhere in Greece and minimize the risk of electricity shortages during peak periods and high seasonal demand.

The new interconnector will stimulate development of the wind power sector and hybrid renewable energy in Crete and allow the strong and regular winds on the island to provide clean power for the rest of the country.

The European Investment Bank is one of the world’s largest financiers of energy projects and over the last 5 years has provided EUR 2.2 billion to support new investment to harness wind power, improve power distribution and transmission and improve the security of energy supply across Greece.

This included new financing for new windfarms, reinforcing electricity distribution by the Hellenic Electricity Distribution Network across both the mainland and islands and backing the Trans-Adriatic Pipeline, the largest construction project currently underway in the country.

Last year the European Investment Bank Group agreed EUR 1.9 billion of new financing that will support transformational investment by companies across Greece, improve energy infrastructure and enhance public services in cities. Outstanding EIB exposure to projects in the country totals EUR 19 billion, representing more than 10 percent of Greek GDP.