Greece’s electricity market operator LAGIE published last week its renewable energy statistics for 2014. According to LAGIE’s report, Greece had installed at the end of 2014 a cumulative 2.596 GW of solar PV compared to 2.583 GW of solar PV at the end of 2013.
Of the newly added PV installations, 11 MW came from ground mounted systems and 2 MW from rooftop installations. pv magazines public policy correspondent Ilias Tsagas investigates whether Greece’s flawed policies are now fixed, and if its PV market can rebound.
Expected Greek PV downfall
Greece’s PV stall is the result of the former government’s policies, which clearly attempted to reverse Greece’s stellar PV growth. The country had installed 1,047 MW and 890 MW of solar PV in 2013 and 2012 respectively, causing the debt in Greece’s special fund for supporting renewable energy (RE) projects to balloon dangerously.
Greece’s PV lobby had accused the former Samaras government that it was eager to implement brave cuts in renewable energies. However, the government lacked the will to reform the energy sector overall and convening a level playing field for competition and energy costs across all technologies.
The former Greek government had also accused PV investors of receiving among the highest public subsidies in the world. The latter claim is, sadly, correct. Most of Greece’s main PV stakeholders have confirmed to pv magazine that the internal rate of return (IRR) for PV plants in Greece before the retroactive cuts exceeded the European average by far.
It is evident that Greece’s policy makers preceding the Samaras government had designed unrealistic and flawed policies that exceeded the country’s finances and which would, sooner or later, harm the sector they intended to foster.
In trying to correct their errors, Greek policy makers crafted a package of retroactive cuts that did not involve the financing institutions, hence leading the domestic PV market into what pv magazine has labeled ‘the Greek PV market paradox‘.
At the end of last year, a re-emerging PV market for Greece began to sound viable.
Last year’s retroactive laws had borne some appealing fruit. The government had lifted its ban in processing pending PV licenses and had once again opened the market. It had also allowed for 200 MW of new PV to be installed each year until 2020.
This was far from business as usual, however, since the new feed-in tariffs (FITs) were much lower. Nevertheless, low tariffs do not discourage those PV investors tempted by Greece’s excellent solar resource. Thus, when the Greek energy regulator RAE recently called the old application holders for plants larger than 1 MW to confirm whether they wanted to proceed with their development plants, an impressive 1 GW (compared to the initial 4 GW of dated applications) of projects were confirmed as under consideration.
Stelios Psomas, policy advisor at the Hellenic Association of Photovoltaic Companies (HELAPCO) told pv magazine at the end of last year that should the FITs in 2015 be kept at the 2014 levels, the Greek PV market would once again splutter into life.
However, the most fascinating point of Psomass interview with pv magazine was the following statement: “Our [HELAPCO] studies confirm that grid parity at wholesale market prices in Greece will be achieved in the next decade. However, in the medium and low voltage levels, the cost of generating solar power is already cheaper than the retail price of electricity.
“Bear in mind,” he continued, “that in Greece the average cost of electricity generated from conventional fuels (lignite, natural gas and oil) is 91.8/MWh [while the current FIT for PV plants larger than 1 MW each is 90/MWh]. This reality is distorted because the wholesale electricity market price does not express the real cost of electricity generation but only a fraction of it. Conventional power plants receive direct subsidies over 30/MWh that are not reflected in the wholesale electricity market price. In other words, in practice, PV power is already competitive and cheaper than power from gas and oil plants.”
Price row hints at lignite favoritism
Meanwhile, a new battle has emerged in Greek domestic politics. Energy regulator RAE decided on 30th December to increase the fee that electricity consumers pay to support RE projects. The increase was kept secret in the period leading to January’s national elections and was revealed on March 4.
The new energy minister Panayotis Lafazanis said on Sunday that the ministry will do anything that is possible to reverse RAE’s decision. He didn’t say, though, where the ministry will find the funds to plug the deficit of LAGIE’s Renewable Energy Sources fund, used to pay renewable energy producers in Greece
According to last week’s LAGIE report, the deficit stood at 149.69 million ($158 million) at the end of 2014, down from 551.62 million ($583 million) at the end of 2013.
An alternative solution to electricity price hikes could be further retroactive cuts to Greece’s PV sector, or a reformation of the energy sector in order to establish a level playing field and end the favoritism of market incumbents through indirect fossil fuel public subsidies.
The latter looks as distant as ever, for it to happen requires the implementation of market rules that the new government rejects. Witihin days of taking up his ministry post, Lafazanis announced the scrapping of Greece’s attempts to liberalize its energy sector. The new government has strong ties with Greece’s power incumbent, the Public Power Corporation (PPC), which is the owner of all of Greece’s coal power plants that the new government wants to keep public. Syriza has made it a government priority to lower electricity prices. This, in essence, means Greece’s lignite plants will not only remain public, but well alive too.