Identifier
Created
Classification
Origin
08ATHENS1481
2008-10-29 06:46:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Athens
Cable title:  

RNEWABLES: A HOT SECTOR STYMIED BY THE USUAL

Tags:  ENRG KGHG SENV TRGY GR 
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VZCZCXRO8130
OO RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHTH #1481/01 3030646
ZNR UUUUU ZZH
O 290646Z OCT 08 ZDS
FM AMEMBASSY ATHENS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2682
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RHMFIUU/HQ EPA WASHINGTON DC PRIORITY
UNCLAS SECTION 01 OF 02 ATHENS 001481 

C O R R E C T E D C O P Y (SENTIVE CAPTION ADDED)

SIPDIS
SENSITIVE

DEPT FOR EUR/ERA FOR BEH/NELSON, EUR/PGI FOR TESSLER,
OES/PCI FOR FITE/HUDAK, OES/EGC FOR FENDLEY

E.O. 12958: N/A
TAGS: ENRG KGHG SENV TRGY GR
SUBJECT: RNEWABLES: A HOT SECTOR STYMIED BY THE USUAL
GREEK BUREAUCRACY

ATHENS 00001481 001.2 OF 002


UNCLAS SECTION 01 OF 02 ATHENS 001481

C O R R E C T E D C O P Y (SENTIVE CAPTION ADDED)

SIPDIS
SENSITIVE

DEPT FOR EUR/ERA FOR BEH/NELSON, EUR/PGI FOR TESSLER,
OES/PCI FOR FITE/HUDAK, OES/EGC FOR FENDLEY

E.O. 12958: N/A
TAGS: ENRG KGHG SENV TRGY GR
SUBJECT: RNEWABLES: A HOT SECTOR STYMIED BY THE USUAL
GREEK BUREAUCRACY

ATHENS 00001481 001.2 OF 002



1. (SBU) Summary: With pleny of natural sunlight and wind,
Greece is well-positioned to tap into one of the hottest
sectors in the energy market. Although improving the
investment climate for green renewable energy sources (RES),
particularly solar energy, is a priority, the Greek
Government still struggles with investor demand that exceeds
capacity. EconOff discussed the issue with government
interlocutors and the private sector including: Center for
Renewable Energy Sources (CRES),a public entity supervised
by the Ministry of Development; advisors to the Secretary
General Skylakakis of the Ministry of Development; and a
small company called Green Project that works with investors
on solar energy projects. End Summary

Bureaucracy Slows Down RES Market
--------------


2. (SBU) The renewables sector in Greece has amazing market
potential estimated at USD 1.9 billion and a ten percent
annual growth rate (2005 - 2007) and yet it faces a sizable
back-log of project requests, particularly in solar energy.
According to government representatives, the Government of
Greece (GoG) is working hard to modify its legislative
framework to reduce licensing requirements and devise
sustainable financial incentives to attract investors.


3. (SBU) CRES Director Papastefanakis told EconOff that the
GoG was having trouble keeping up with investor demand and
implementing projects n the green RES market. He said the
GoG was over-extended and had trouble managing the number of
applications from investors for permits, adding that the GoG
could not sustain the financial incentives offered in the
long-term. As a result, he said the GoG was revising its
legislation to refine both procedural bureaucratic hurdles
and financial incentives.


4. (SBU) Specifically, the GoG was looking at reducing the
capital subsidy, which presently assists in the investment
costs of construction. Eligibility for the subsidy requires
the investor to prove that they have already started on the
project and possess sixty percent of financing costs. In
addition to the capital subsidy, the GoG offers a feed-in

subsidy, or a fixed buy-back rate for electricity, to match
the marginal electricity costs going forward. The feed-in
subsidy price is anticipated to drop substantially in the
revised legislation.

GoG Changing the Rules of the Game
--------------


5. (SBU) A small company based in Greece called "Green
Project" told EconOff that the process for a renewables
roject was much more complicated in Greece than anywhere
else. They said it takes at least one year to get the final
authorization to operate a solar panel in Greece, versus
Germany where it takes just a month. Restrictions on lad
use, so that prime agricultural land is exclded, also play a
role. For facilities that poduce over 20 kW and under 150
kW, it requires extensive maneuvering through the Greek
bureaucratic system including: a decision by the Regulatory
Authority for Energy (RAE),an environmental permit, a
planning authorities licene, an interconnection agreement
with the utilty company, and a contract with the system
operator.


6. (SBU) Green Project said the GOG had over-issued permits
to private operators and would most likely be unable to meet
the financial obligations required by this over-issuance.
Part of the problem, they cited, involved the rigid
requirements of the program developed from the 2006 RES law.
Green Project said the new legislation may or may not help,
and perhaps even change the rules of the game. Even the
Embassy's own photovoltaic cell project is presently waiting
for the outcome of this newly proposed legislation and
whether it will reduce some of the bureaucratic hurdles in
installing photovoltaic cells on the Embassy's parking garage
roof.

Capacity Constraints
--------------


7. (SBU) In addition to the financial obligations, CRES and
Green Project believe that the electricity grid will not be
able to absorb nor transmit energy generated by these new
producers. Part of the problem is that the photovoltaic
market was marginal, prior to 2006, and was mainly based on
off-grid systems. Grid connected systems began to dominate

ATHENS 00001481 002.2 OF 002


the market as late as 2007. As for wind energy,
Papastefanakis said wind farms had difficulty providing newly
generated electricity to remote islands due to a weak grid
infrastructure. Simultaneously, it was a challenge to
interface with those areas that had the greatest potential to
conduct wind energy but had the least ability to connect to
the grid infrastructure. Storage of wind energy also remains
an issue particularly during the summer season with peak
demand and low intake. Papastefanakis said the GOG was
exploring alternatives including mixing renewable energy
sources with conventional sources to cover those peaks.

RES Reform a Priority
--------------


8. (SBU) Viky Georgakopoulou, Advisor to SecGen Skylakakis
in the Ministry of Development told EconOff that the program
for solar energy proposals was a political priority and
confirmed that the GoG was looking at ways to reform the
sector to attract investors. Georgakopoulou confirmed the
presence of strong investor interest, noting that when the
subscription window opened in June 2007 for projects totaling
700MW, it was oversubscribed by over five times by
applications with a combined total of 3700 MW. Given the
technical and financial constraints, Georgakopoulou said the
GoG could not approve all the applications submitted. (Note:
This is in line with Papastefanakis' comments that the GoG
does not have enough resources to manage the influx of
projects. End Note.) Despite the backlog, she noted that
the regulatory authority did plan to review each application
once the legislation was finalized.


9. (SBU) Georgakopoulou pointed out that the new legislation
would govern investments, subsidies, installations as well as
electricity production and sales. Specifically, she
highlighted that the new law would lower the rate at which
Greek Public Power Corporation (PPC) will be able to buy back
electricity from the producer to a more realistic rate.
(Note: The pricingof electricity is determined by the
Ministry f Development and is a ten year purchasing
agreement between the producer and Hellenic Transmission
System Operator (HTSO) that can be extended for ten more
years unilaterally, upon a written declaration by the
producer. End Note.) The law will "clean up the market" and
will have different sub-chapters on photovoltaics and other
renewables, she said. Despite all these efforts,
Georgakopoulou estimated that it will take an average of 1.5
years for the realization of some of these projects.


Comment
--------------


10. (SBU) Greece continues to rank low relative to other
European countries on the actual use of renewable energy
sources in spite of strong EU financial support. On a
positive note, it recognizes that this sector is key to
meeting EU obligations and is working towards taking
advantage of free natural resources. Greece's challenges
remain streamlining its bureaucratic machine so that it does
not alienate potential investors and developing sustainable
financial incentives, particularly among today's already
contentious political climate. End Comment.
SPECKHARD