Law firm Metaxas and Associates will be representing several foreign and Greek renewable energy sources (RES) investors in a bid to lodge a complaint with the European Commission on the retroactive taxation on RES, recently imposed by the Greek Ministry of Environment, Energy and Climate Change.

Coordinated by Dr. Antonis Metaxas, Lecturer of European Law at the University of Athens and Managing Partner at Metaxas, the complaint will mainly focus on the infringements of European Energy and State Aid Law contained in the relevant provisions, by adopting an interdisciplinary approach that will help underline a series of legal arguments related to the functioning as well as the distortions of the Greek energy market.

At the end of November, Hellenic Association of Photovoltaic Energy Producers (SPEF) filed an official complaint to the European Commission against the Variable Cost Recovery Mechanism (VCRM). VCRM acts in favour of conventional electricity producers from natural gas, however is simultaneously heavily distorting the wholesale electricity price of the market, called System Marginal Price (SMP). At any given time in the Greek system all conventional power producers should be remunerated according to this SMP price (the price of the higher conventional unit needed to be engaged in the system to meet power demand).   

The VCRM however, which SPEF considers a distortion, for gas power producers acts as a guaranteed feed-in tariff scheme completely distorting or even more waving out competition. Although the Greek energy generation system is supposed to select the cheapest conventional source of energy at any given time in order to meet demand, VCRM intervenes so the opposite is paradoxically happening, outside of the SMP system and rationale. Hence, at any given time all gas power producers remain paradoxically always in the system remunerated due to VCRM not with SMP but with a standard price of €100-110 per megawatt hour, out of the SMP competitive rationale, while SMP remains distorted showing an artificial level of €40-60 per megawatt hour at the same time. Thus SMP is not at all reflecting the cost of conventional electricity absorbed by the system that is €100-110/MWh.

Feed in tariff of RES is then wrongly compared to the distorted – artificially lowered SMP in order to calculate the added special RES levy needed, for supporting their FIT scheme. This way RES levy shows always inadequate and consequently deficit is generated to their special RES account LAGIE holds.

Speaking to PV-Tech, President of the SPEF, Stelios Loumakis, said the SPEF is expected to file one more official complaint to European Commission against the taxation posed to photovoltaics through law 4093 by the Government.

Furthermore, Metaxas also has the support of Dr. Ph. Nicolaides, Jan Tinbergen Chair of European Economics and Director of Studies in the College of Europe who has acted as consultant to a number of public authorities in various EU Member States as well as to international institutions and organisations such as the European Commission, the European Investment Fund, the European Economic and Social Committee, the OECD and the UN.

The law firm said the complaint with the EU Commission will be the first crucial step towards challenging the retroactive taxation, apparently to be followed by a series of further legal actions, at both individual and collective level, before the Greek and European courts and tribunals.