Greece cuts FiTs retroactively

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The Greek government is to introduce retroactive cuts to the country’s feed-in tariff in a bid to reduce a deficit in the fund it uses for renewable energy.

The FiT cut will will come into effect on 1 June 2013 and apply to plants installed in February. Plants under 100kW will receive €95 per megawatt while plants over 100kW will receive €120 per megawatt, understood to be a 44% cut on current levels.

An annual degression of €5 will be made until 2014.

For rooftop installations, from February 2013 the FiT will be €125 per megawatt with an annual degression of €5 until February 2017 when the FiT will degress bi-annually until August 2019 to €80.

However, head of political communications at the European Photovoltaic Industry Association Craig Winneker does not believe the government’s retroactive measures will reduce the country’s RES deficit: “Taxes are not acceptable, even if there is tariff deficit; the high cost of FiTs comes from the fact that FiTs have not been adapted early enough.

“In addition,” Winneker told PV-Tech, “the fact of having regulated tariffs in Greece is the core of the problem rather than the actual cost of FiTs.”

Environment and energy minister, Makis Papageorgiou, and the deputy finance minister, George Mavragani, said that as Greece is fast approaching its 2.2GW solar goal, such a high FiT was no longer necessary to spur growth in the PV sector.

President of the Greek Association of Photovoltaic Energy Producers (SPEF) Stelios Loumakis agreed the cuts were necessary. He told PV-Tech that the cuts would help electricity market operator LAGIE overcome the “severe” delays it is experiencing in paying developers through the Renewable Energy Sources Fund.

Winneker believes although the Greek proposal is “in line with other FiT decreases seen in Europe in recent months, it will put an end to the robust and sustainable development of the Greek market, which has installed close to 1GW in 2012 – a remarkable amount in a country of 11 million inhabitants.”

Winneker also told PV-Tech that the “harsh” decrease in FiTs over the last six months “goes against the course of action we have always recommended: to have progressive, even if strong, visible price decrease, the foreseen Greek decrease in long term FiTs is not the right way to go.

“A formula taking into account market development would make more sense and avoid reviewing the tariffs so often, reacting to dynamic market development.”

Furthermore, Winneker states that even though the rest of the market is experiencing low PV component prices, this is not the case in Greece which in tandem with FiT cuts will lessen the attractiveness of the Greek market.

“Administrative barriers and costs (53% of development costs in the residential sector are due to administrative costs!) as well as access to capital are making systems more expensive than in competitive markets like in Germany, therefore the level of FiTs has to be well adapted to the situation for each segment and / or the level of burdens removed.”

The RES Fund is expected to reach a deficit of €473.62 million by the end of this year and €905.29 million by the end of 2014.

The European Commission and Germany recently signed a Memorandum of Understanding to help expand the Greek renewable energy sector. The Commission agrees that a favourable investor climate is required if the country intends to fulfil its plans to have a successful renewables industry.

“The Commission still believes that the renewable energy sector in Greece can be an important sector for growth and jobs in the country. It is time to set the ground for a competitive renewable energy industry in Greece,” Nicole Bockstaller, press officer for energy policy at the office of EU energy commissioner Günther Oettinger told PV-Tech. “The possibility for exports in the framework of a project like for example Helios could further contribute to this development.”

 

However, Bockstaller notes that “this can only be done if the investor climate in Greece is inviting. The efforts to financially stabilise the support framework have to be balanced with creating attractive business opportunities for investors. Any measures should therefore be closely consulted with stakeholders and need to be carefully designed to create a favourable but cost-effective framework.”

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