The numerous available options for the development of the Greek electric sector in combination with the various techno-economic and political constraints make energy planning rather complex. Furthermore, as full auctioning of CO2 allowances shall be the rule from 2013 onwards for the electric sector following free allocation, even more uncertainties emerge. This work aims at investigating the main characteristics of the Greek electric system taking into consideration the various allowance allocation schemes, evaluates fundamental energy scenarios and ultimately performs energy planning. The reliability of the algorithm utilised is assessed by predicting successfully key figure energy results for years 2004–2008. Main parameter under investigation in the study is the cost of CO2 emissions allowances, while expansion scenarios are evaluated according to a newly developed set of indices standing for feasibility, environmental performance, cost effectiveness and energy safety. Many expansion scenarios examined were proved unrealistic as led to extremely high utilization of imported fuels for electricity production, while others proved inefficient on environmental or economic basis. Finally, it was proved that if a “conservative” energy planning is adopted, emissions reduction in 2020 can reach 6.3% over 2005.