RENEWABLES: GREECE AMENDS PHOTOVOLTAIC LAW BUT

UNCLAS SECTION 01 OF 03 ATHENS 000118 SIPDIS SENSITIVE DEPT ALSO 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: KGHG SENV ENRG TRGY PREL PGOV GR SUBJECT: RENEWABLES: GREECE AMENDS PHOTOVOLTAIC LAW BUT STILL LACKS CAPACITY REF: A. ATHENS 1481 ¶B. ATHENS 1538 ¶1. (SBU) Summary: Ministry of Development and its Renewable Energy Sources (RES) division contacts told EconOff January 20 they were close to wrapping up legislation designed to improve the environment for investing and implementing photo-voltaic (PV) projects. The new law was approved on January 22 by the Hellenic Parliament and amends legislation originally approved in 2006 to regulate and incentivize the photovoltaic industry. A representative from the Regulatory Authority on Energy (RAE) described the strong resistance of Greek communities to the placement of these photo-voltaic projects, attributing the issue to a lack of awareness of the Greek public. Although the legislative framework is now in place, the Greek Government officials were not able to describe just how the GoG will build capacity, as well as review and decide upon a substantial backlog of projects by the end of 2009. End Summary. Finalizing PV Legislation -------------- ¶2. (SBU) Ministry of Development Advisors to Secretary General Mousouroulis and the Director for Renewable Energy Sources (RES) Charalampos Pippos reported to EconOff on January 20 that the PV legislation was close to being approved by the Hellenic Parliament. (Note: They had originally reported that it would be in place by year-end. (reftel a) End Note.) The advisors - Viky Georgakopoulou and Antony Marinos - said that even under new Minister of Development Costis Hatzidakis, SecGen Mousouroulis would continue to have purview on renewables for all energy matters. Georgakopoulou and Marinos affirmed that the new law develops a separate program for rooftop PV with a different feed-in-tariffs (FIT) scheme than the one originated in the 2006 legislative framework, and that the FITs would be guaranteed for 20 years. ¶3. (SBU) In addition, Georgakopoulou said the new PV law set a deadline to review its backlog of photo-voltaic projects by the end of 2009. In the 2007 window for PV projects, investors oversubscribed the bid for projects by five times the available KW. (Note: Greece has a set amont of electricity that it is able to take into the grid. End Note.) Those applications remain in a hold file at the Regulatory Authority on Energy (RAE). According to the new legislative framework, these projects on hold must be reviewed and decided upon by the end of 2009; however, none of the interlocutors at the Ministry of Development could explain how this would be done. There were no plans for building capacity for RAE nor the RES arm of the Ministry of Development. Instead, they said they would resort to technical outsourcing and even scour for candidates from within the Ministry of Development to assist the initiative. Nevertheless, they had made the request for additional staff from the Ministry of Economy and Finance, but did not expect assistance in these lean budget times. Looking for Help -------------- ¶4. (SBU) Marinos said that they hoped the revised legislation would continue to attract investment from the private sector. He added that this was necessary as the GoG did not receive any financial support from the EU for ramping up this sector, especially not in the way of operational costs. However, the EU did support studies and small amounts of technical assistance to private investors. Georgakopoulou and Marinos said they had traveled to Denmark, Germany, Spain, Sweden, and the UK to look at their projects and discuss their policy approaches. One key problem that they were all facing was how to increase transmission capacity into the electricity grid. It was particularly problematic when they considered the more remote islands, noted Marinos. ¶5. (SBU) Pippos commented that, now that the legislative framework is in place, they were looking for best practices in licensing and administration and at technical issues such as the implementation of storage facilities for the electricity fed back into the grid. They said the Public Power Corporation (PPC),the Greek monopoly provider of electricity, was subject to the rules of the Ministry of Development and had to coordinate and "obey" the directives outlined. ATHENS 00000118 002 OF 003 Relationship with RAE -------------- ¶6. (SBU) Marinos said Regulatory Authority on Energy is a very independent authority, which mostly provides opinions on the energy sector, comprised of electricity and natural gas. (Background Note: RAE's duties are as follows: monitors the operations of all sectors of the energy market, collects and processes information on energy in Greece, grants and monitors photo-voltaic licenses, issues a report every two years on the security of energy supply, and arbitrates complaints and disputes on transmission and distribution. End Background Note.) ¶7. (SBU) Georgakopoulou said that lack of staff at RAE prevents it from playing a pivotal role in the energy market. She added that most projects were outsourced to the Center for Renewable Energy Sources (CRES) or Hellenic Petroleum. Right now, the Ministry of Development was in discussion with RAE about how to pass on fees for renewables projects to the consumers. Greek consumers of electricity currently pay a small amount of euro cents in their electricity bill, which could potentially be increased to a few euros to pay for this new program. The advisors explained that Greek officials were reluctant to increase the additional cost for fear of political repercussions, but these conversations would continue until a viable solution is found. NIMBY! RAE faces political and legal hurdles -------------- ¶8. (SBU) Regulatory Authority on Energy (RAE) RES Unit Coordinator Georgia Glinou told EconOff on January 28 that it was not just a matter of building capacity to increase Greece's chances of meeting renewables' targets. She stressed that there were several on-the-ground factors that hindered these projects from moving forward. Glinou described how each renewables project was required to submit a feasibility study and that this had to correlate with the use of land specified in the registry. The Ministry of Environment and Public Planning had embarked on a project to create a database on land uses and ownership, but this was far from complete, as public land ownership remains a complicated and contentious issue. ¶9. (SBU) In addition to disputes over land-ownership, regional associations, municipalities, and even individuals frequently complained to the courts if the transmission grid passed through their property. Glinou said that judges put an injunction to stop the project from moving forward and that this could delay projects for three to five years. In general, Glinou said the Greek public did not grasp the benefits from the use of RES and were often resistant to the implementation of the projects. ¶10. (SBU) As a result, RAE was looking more closely at providing incentives to municipalities. Glinou said that all municipalities had reaped about 5 million euros from a legally-mandated 3 percent of profits from wind projects that was designed to give back to the community. She explained that when the photo-voltaics law had been initiated in 2006, this 3 percent was not included in order to provide incentives for the investors. As a result, she said they would have to come up with other incentives to convince municipalities and regional associations to agree to the implementation of RES projects. Comment -------------- ¶11. (SBU) As earlier reported, Greece is serious about getting its act together on photo-voltaics. By laying the legislative framework to improve the investment and business climate in this sector, Greece is sending a strong signal that this is a priority, and not only to meet its EU directives on renewables. Keeping SecGen Mousouroulis as lead on this issue lends continuity to this initiative, but there does not appear to be an articulated plan for ramping up the GoG's capacity to review and implement an enormous backlog of projects within a year. The GoG also faces hurdles in changing public opinion on RES projects and are looking at ways to incentivize municipalities. Post continues to engage with the GoG on renewables and is identifying opportunities to share our best practices with the GoG, particularly in areas of licensing and administration. End Comment. ATHENS 00000118 003 OF 003 SPECKHARD