The Greek government has been granted approval by the European Commission to financially support the modernisation of power plants on 18 non-interconnected Greek islands.

The Commission ruled that Greek plans are in line with EU state aid rules, Platts reports.

Greece had notified the EC of plans to grant national utility PPC a guarantee enabling it to secure a EUR190m ($212 million) loan from the European Investment Bank.

The loan is to cover half the cost of upgrading, expanding and refurbishing existing power plants on the Greek islands not connected to the mainland grid. PPC will finance the other half of the costs from its own budget.

The measure involves state aid because the terms of the public loan are more favourable than those a commercial operator would have accepted, the Commission said.

The aid was in line with EU rules because it would result in efficient, affordable electricity to consumers on the islands.

The project involves installation of 1 MW-to-25 MW fossil fuel-fired engines totalling 295 MW on islands in the North and East Aegean, Dodecanese, Cyclades, and the Diapontia island complex, with upgrading of associated infrastructure.