Greece added 148 MW of solar photovoltaics in the second quarter but the situation for solar developers is getting tougher: new FIT cuts are on the way and consumers face 120% electricity fee hikes to back new RES projects.
With respect to the autonomous electricity grids of the Greek islands, developers also completed a small number of new ground-mounted photovoltaic installations in June, although official figures have not yet been published. The country’s cumulative capacity in the end of June amounted to 2.485 GW.
The figure is in sharp contrast with the 801 MW of new solar PV Greece had installed in the first quarter of 2013. However, the decline was expected due to lower tariffs as well as other measures that discouraged investors.
New FITs cuts planned: towards a 'new deal'
Meanwhile, in addition to the recent drastic feed-in tariff (FIT) cuts imposed on new photovoltaic installations, the Greek Ministry of Environment, Energy and Climate Change (YPEKA) now wants to cut tariffs for existing photovoltaic systems. YPEKA presented its plan at a meeting with representatives of the renewable power industry in Athens on Tuesday.
According to Greek press reports, YPEKA asked the solar industry to accept FIT cuts regarding operating photovoltaic projects up to 45%, and representatives of other renewable power sectors to accept tariff cuts for existing projects up to 10%. The level of the suggested tariff cuts will not apply to all operating PV projects horizontally, but will rather take into account specific projects' details such as the initial tariff it was assigned, its building cost, time of development and loan conditions.
YPEKA is initially trying to persuade renewable power producers to voluntarily accept the FITs cuts. In exchange, YPEKA is offering to work on their behalf and pressure banks to extend the duration of loans and reduce interest rates, as well as asking LAGIE to lengthen the initial power purchase contracts signed.
Described by Greek media as a "new deal," the attempted voluntary character of the new FIT cuts will affect about 6,000 to 7,000 photovoltaic power producers. Voluntary or not, YPEKA is widely expected to push through the new FIT cuts, by alternative methods if necessary, regardless of how developers respond.
YPEKA Deputy Minister Asimakis Papageorgiou told the renewable power industry representatives that the rationale behind the suggested cuts is to establish a sustainable energy market that works in the long term. To achieve this, Papageorgiou added, the deficit of LAGIE's Renewable Energy Sources (RES) fund, used to pay renewable energy producers in Greece, needs to be eliminated. According to data published in July by LAGIE, its RES fund deficit reached €436.1 million by the end of May and is projected to climb to €616.17 million by the end of 2013.
Papageorgiou referred to similar cuts also imposed in other European countries and reminded attendees that returns for many photovoltaic projects in Greece (mainly the ones that enjoy older, higher tariffs) remain unsustainably high.
The Hellenic Association of Photovoltaic Companies (HELAPCO) and the Hellenic Association of Photovoltaic Energy Producers (SPEF) confirmed the meeting to pv magazine. However, the associations declined further comment on the suggested measures but promised to release a statement by Aug. 5, when YPEKA has asked them to submit their proposals regarding the "new deal." YPEKA is aiming to have the draft bill by September and bring it before parliament soon after a brief public consultation.
Paving the way to the 'new deal' with electricity fee hikes
The way to the 'new deal' measures was paved last week by the Greek regulatory authority for energy (RAE), which announced on Friday the increase in the fee electricity consumers pay to support RES projects. The increase was imposed retroactively from July 1 and its level depends on the type of electricity consumer.
Industrial consumers will pay less, while domestic households will bear the highest rate, around a 120% increase. Starting July 1, households will pay a fee of €20.80 per MWh, up from €9.53 per MWh. In justifying the measure, RAE argued that it is necessary to reduce LAGIE's RES fund deficit, and that the increase will be even higher in the future should no more RES-related measures come into force. YPEKA backed RAE, saying the fee increase was a "rational" one.
On Thursday, RAE also introduced temporary changes related to the functioning of the wholesale energy market. These, RAE said, would allow the energy system and all relevant stakeholders to slowly adjust in order to introduce permanent changes next year.
Most of the changes aim to increase fairer competition among energy producers and remove distortions in the energy market. However, RAE has caused some alarm in the renewables industry with the statement: "The Greek electricity market presents significant structural distortions and weaknesses ... and these problems are even more complex and cumbersome taking into account the effect of the rapid, completely unplanned and completely unbalanced penetration of renewables, in particular solar, in the energy mix of the country."
While critics note that RAE's comment characterizes the situation the entire Greek energy sector, including consumers, currently finds itself in, they point out that it is now the consumers and the RES producers who are being forced to pay for the state’s lack of a balanced energy plan.
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