Greece prepares for more retroactive PV cuts14. February 2013 | Top News, Applications & Installations, Global PV markets, Industry & Suppliers, Markets & Trends, Investor news | By: Ilias Tsagas
Greece’s Ministry of Environment, Energy and Climate Change (YPEKA) is expected to introduce retroactive photovoltaic feed-in tariff cuts to parliament. The goal is to reduce the burgeoning RES Fund deficit, which is forecast to almost triple by the end of 2014 on the back of significant photovoltaic growth.
In an unprecedented, yet not very surprising move, YPEKA is expected to introduce new photovoltaic measures to the Greek Parliament in the coming days, according to the Greek press, which cites ministerial sources. The measures are said to include further FIT cuts for both new and already existing projects.
Local media, including the Kathimerini newspaper and energypress portal, reports that LAGIE, the Greek operator of the electricity market, has paved the way for the government to introduce the new measures as a way of tackling the growing Renewable Energy Sources (RES) Fund deficit, which is expected to balloon from €331.5 million at the end of 2012, to €473.62 million by the end of this year, and €905.29 million by the end of 2014. The fund is used to pay renewable energy producers in Greece.
The deficit projections have been published in a new report by LAGIE, which forecasts that 656 MW of new photovoltaic installations will be added to the Greek grid in 2013, and almost 300 MW in 2014, thus taking cumulative installed capacity to 2.46 GW. At the end of last year, states the report, cumulative capacity reached 1.54 GW. Previously LAGIE only published monthly installation figures.
Its newly published report warns, however, that the growing cumulative deficit "endangers the support system of the RES sector." Therefore, it concludes, "it is necessary to take further measures in the next period for the gradual amortization of the deficit by December 2014".
Defending previous action, YPEKA has claimed that LAGIE's enormous deficit forced the government to introduce a package of drastic measures, including significant FIT cuts, suspending the approval process for new and pending PV applications, and introducing a retroactive photovoltaic levy in November.
Mr. Papageorgiou, YPEKA's Deputy Minister, further claimed that the deficit reached €370 million before the measures, meaning the €331.5 million deficit recorded at the end of 2012 shows that they did have a positive impact, although they have failed to significantly reduce it.
Other proposed measures
In addition to proposing retroactive photovoltaic FIT cuts, YPEKA is also considering extending the retroactive levy announced in November, to more photovoltaic projects. Currently, the levy only applies to those installations which received tariffs before the FIT cuts last August. However, YPEKA now intends to apply it to those projects which have been operating with the reduced, post-August, tariffs.
Meanwhile, regarding older installations receiving higher tariffs, it has been reported in the Greek press that the government may try to pursue voluntary deals with investors, which could include accepting further FIT cuts in exchange for extended power purchase agreements.
Finally, the Greek Government is expected to introduce a measure which secures financial guarantees from prospective photovoltaic investors. Under the measure, investors applying for photovoltaic licenses will have to provide financial guarantees for their projects. This has reportedly been proposed after the ministry noticed many projects have been granted space in the power grid, which later cannot be implemented, due to financial constraints.
To date, YPEKA has not called for a public consultation on the proposed new measures. The Greek press reports that the government is in a hurry to introduce them in light of the fast photovoltaic installation rate, which requires more RES Funds; and due to the collapse of the CO2 stock market price, which has seen revenues from auctioning CO2 emission rights (which also support the LAGIE Fund) fall sharply.
LAGIE's report additionally included a projection of the deficit, had the recent levy applied to photovoltaic parks (and other measures introduced by YPEKA for electricity consumers) not been imposed. In this instance, the report says, the deficit at the end of 2014 would reach over €2 billion.
The figure can be considered an indirect reply to both the legal battles the Greek Government faces in the Greek courts, and to the formal complaints filed recently at the EU Commission.
The Hellenic Association of Photovoltaic Energy Producers (SPEF) has taken action against the levy on the Greek courts and the European Commission since November, while this month Greece-based Metaxas and Associates Law Firm, representing a number of Greek and foreign PV investors, lodged two complaints with the European Commission against the levy.
Edited by Becky Beetz.
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