Thinking about Greece used to evoke images of summer holidays spent on sunny beaches or sailing the steady winds of the Meltemi in the Cyclades. But today, with the country intent on becoming the energy hub of southeastern Europe, investors may be looking at Greece in a whole new way.
With excellent resources of sun and wind, a desperate need for economic stability and growth, and recent changes in national investment and energy policies, Greece could be worth a closer look when it comes to renewable energy investment potential. Indeed, Greece has been courting representatives of the German solar industry in a concerted effort to persuade companies that the Greek market is ripe for investment—and spark an employment revival in the process.
Although Greece’s well-publicized financial troubles seem to make such efforts a hard sell, legislative changes could make investment in the Greek solar energy market more attractive.
Greek licensing procedures for projects using renewable energy sources (RES) have been simplified, and a broad variety of incentives and compensation schemes have been introduced. Indeed, Law No.3894/2010 was passed by the Greek legislature specifically to remove roadblocks in the permitting procedure and to fast-track large-scale strategic investments, including investments in renewables.
The public agency “Invest in Greece” now operates as a one-stop shop for investment planning procedures and oversees and coordinates all the necessary legal authorizations for project development. Under the system in place, project developers grant the agency the irrevocable authority to take all necessary steps in licensing procedure and to apply and collect the necessary permits and licenses for projects.
Greece’s new fast-track procedure ensures that all relevant permits and licenses for the investment are issued within two months after submitting an application to the appropriate agency. An application must include a business plan, an investment impact assessment study and the payment of submission fees. The agency will determine whether or not the proposed investment is considered strategic and will therefore be eligible for the fast-track procedure. This process can be completed prior to a developer making a formal application. To date, several applications for the development of photovoltaic energy (PV) schemes have been submitted to the fast-track procedure.
Greece’s Investment Incentive Law No. 3908/2011 has introduced a range of tax benefits, capital grants and leasing subsidies that will help some projects, although PV parks are not eligible. These investment supports may be granted on a singular basis or as a combination.
Tax benefits are granted as tax reliefs on the profits generated by an investment. Capital grants are nonrefundable payments by the State of Greece for part of the subsidized expenditure as laid out in the investment plan. The leasing subsidies cover part of the leasing rates for the acquisition of equipment for up to seven years.
The percentage of aid for each investment, varying from 15 to 50 percent of the subsidized expenditures, depends on the size of the investor and the region (prefecture) in which the investment is made. Higher subsidies are granted, for example, for investments in eastern Macedonia, Thrace, Epirus and western Greece.
Greece sees itself as the emerging energy hub of southeastern Europe. Priority has been given to the promotion of energy generation from renewable sources (RES) in order to reduce emissions and help achieve the national target that calls for 29 percent of all energy to come from RES sources by 2020. This is up from just 10 percent in 2010.
RES Law No. 3851/2010 promotes the development and implementation of RES projects and simplifies the existing administrative framework. The new legislation not only contains feed-in tariff (FiT) schedules for all types of RES projects, but it also accelerates the licensing procedure.
The first necessary permit is the Electricity Generation License. The Greek Regulatory Authority for Energy (RAE) grants the Electricity Generation License after an evaluation process that assesses the investor’s technical and financial capability and the project’s viability. A project must also comply with certain planning provisions. For example, the generation plant may not be installed within restricted zones and may not exceed official limitations for installed capacity.
In addition, the Environmental Terms Approval (ETA) needs to be obtained. Granting of the ETA depends on the level of the project’s environmental impact. The process of scrutiny is carried out either by local or central government authorities. Consequently, the ETA may be granted by the Department of Environment and Physical Planning for the local region or by the Special Unit for Environmental Licensing of Greece’s Ministry of the Environment, Energy and Climate Change (MEECC). Consent by other bodies, including local authorities, is also necessary.
Once the ETA is obtained, an Installation License is required. This is issued either by the General Secretary of the region or by the MEECC, depending on the type of project.
The project’s operator and the Greek Public Power Corporation S.A. (PPC) must agree on the terms and conditions for access to the grid and must enter into a connection agreement. If the project will benefit from guaranteed feed-in tariffs (see below), the operator will have to enter into a Power Purchase Agreement with the Hellenic Transmission System Operator S.A. (HTSO), the grid operator of the Greek mainland’s interconnected grid. If the plant is erected on one of Greece’s numerous islands and is not connected to the mainland’s grid (the so-called “non-interconnected islands”), then both a Connection Agreement and a Power Purchase Agreement must be concluded with PPC as well.
Once project construction is complete and the plant has undergone commissioning tests, an Operation License is granted by the organization that issued the Installation License.
In the past, the full authorization procedure has taken more than three and a half years on average even for small solar power plants and wind farms.
It has reached seven years for larger projects. With the new streamlined approval process, however, the MEECC coordinates all activities among the different administrative bodies.
Moreover, the RES Law No. 3851/2010 has set mandatory deadlines, establishing a firm time frame within which authorization should be completed. The whole licensing procedure must not exceed much more than one year. Whether this accelerated processing will be achieved is yet to be seen; however, as noted earlier, large-scale RES projects may be considered strategic investments and, thus, may be eligible for the two-month fast-track procedure.
Also, smaller-scale projects (e.g., PV power stations with capacities up to 1MWp, wind farms up to 100kW, geothermal plants up to 500kW, or biogas, biomass or biofuel plants of no more than 1MW) are exempt from the above licensing procedure to a certain extent. Applicants must have approval for the environmental impact assessment and must enter into grid connection and power purchase agreements as appropriate. PV power stations with capacities of 500kW to 2MW are, by ministerial decree, characterized as “zero impact” installations. For solar power stations with capacities less than 500kW and rooftop PV installations with maximum capacities of 10kW, no approval in relation to their environmental impact is required.
Feed-in tariffs are in place for several forms of RES generation, but the most obvious field for energy investments in Greece is the solar market. Even if no special investment incentives were granted for PV power plants, Greece’s geographic position justifies considering the development of such plants. Greece also has an excellent solar incidence, with a high number of sun radiation hours.
Indeed, it is estimated that about one-third of Greece’s energy demand could be met with solar power and, therefore, it is expected that the market will grow aggressively. The Greek solar PV FiT, as in many other European countries, varies depending on the size of the project and the technology used for generating electricity (see table). The date for the applicable feed-in scheme for large PV plants is the date the Power Purchase Agreement begins. Furthermore, the tariff structure encourages the production of energy on non-interconnected islands. In each case, the FiTs are guaranteed for a period of 20 years.
Meanwhile, with its mountainous regions and nearly 14,000 kilometers of coastline, Greece has optimal wind resources that are among the most attractive in Europe. To date, total installed wind capacity is about 1.3GW. By 2020, this capacity is forecast to rise to 7.5GW.
Investment activity in the sector currently focuses almost exclusively on onshore wind projects. But by 2020, about 300MW of wind farm capacity is expected to be installed offshore. FiTs for wind-generated electricity vary, again depending on whether the wind farm is on an interconnected or non-interconnected island. Tariffs are granted based on a 20-year guaranteed Power Purchase Agreement. Wind power investments may also be eligible for additional subsidies under the Investment Incentive Law mentioned above.
Greece’s geographic position is also favorable to geothermal resources, both high and low temperature. High-temperature resources most suitable for power generation are found at depths of 1,000 to 3,000 meters. They can be discovered in some of the Aegean islands and in the basins of central eastern Macedonia and Thrace. The generation of electricity by exploiting geothermal resources is also rewarded with a FiT scheme. Again, compensation is based on a Power Purchase Agreement. In this case, however, payments do not distinguish between interconnected and non-interconnected islands.
Biomass also provides substantial investment opportunities, with high potential for growth. Greece’s agricultural sector might supply sufficient sources of biomass for power generation plants. Regarding biomass to energy, a FiT scheme applies and payment is granted based on the size of the generation plant. Energy generated from the use of biogas (from biomass), as well as gases from rubbish burial dumps and from sewage treatment plants, is also subject to an attractive FiT compensation scheme.
Despite current economic turmoil in Greece, the country’s climate and natural resources make it optimal for generating energy from renewable sources. In addition, the nation’s revised legal framework, combined with attractive feed-in tariffs, make Greece worth considering as an attractive target for future foreign energy investments.