Baseload, Bioenergy, Project Development, Solar, Wind Power

Greece Approves New Renewable Energy Law

Greece’s parliament has approved a new law governing the renewable energies sector. The new law, which allows for feed-in premiums, competitive tenders and virtual net metering, comprises a significant rearrangement of the country’s energy sector.

According to the new policy, all types of new renewable energy plants connected to the grid after Jan. 1, 2016, need to participate in the energy market. Their compensation will consist of what they make in the power market plus a variable feed-in premium. The latter is the difference between a price depending on market variables (e.g., the system’s marginal price) and a set price decided via a competitive tender.

Hence comes the second new element in the new law. Starting on Jan. 1, 2017, the new scheme to approve new renewable energy capacity is based on competitive tenders. Following recommendations of the energy regulator, the Greek energy minister will be able to call on a tender for specific capacities and technologies.  

In 2016, the country will run a pilot tender for solar PV plants only. The pilot tender, according to the law, will tender at least 40 MW of solar PV projects. Investors need to pay a 500-euro fee to Greece’s energy regulator to be allowed into the bidding process, while bids for PV farms larger than 10 MW will not be accepted. The date for the pilot tender will be announced at a later date.

There are some exceptions to the new policies. Firstly, wind power plants smaller than 3 MW, projects using all other renewable types of technology that are smaller than 500 KW and innovative projects that use a new type of technology configuration (e.g. a university-based innovation) can still apply for a set feed-in tariff (FIT). Agreements based either on set FITs or following a feed-in premium are valid for 20 years, except solar thermal plants that are compensated for 25 years.

Secondly, projects that have signed a power purchase agreement (PPA) with Greek institutions by Dec. 31, 2015, do not need to participate in the energy market and can still apply under the previous policy scheme (of stable FITs). The only condition for this is wind projects to be connected in the grid by June 30, 2018, or by Dec. 31, 2017, for all other type of projects.

Finally, the new law allows for virtual net metering projects, albeit for specific investors only. These are educational institutes (e.g., schools and colleges), city and regional councils, farmers and farming associations, and they can use any type of renewable energy technology.

The new law benefits particularly the solar PV sector that boomed in 2012 and 2013 but stagnated in 2014 and 2015. Therefore, solar PV investors see an opportunity for the market to restart.

The wind power market on the contrary never stagnated and kept adding sustainable amounts of new capacity throughout all the years. A representative of Greece’s wind energy association said the group has welcomed the new law, but they also are seeking more clarity regarding the market mechanisms as soon as possible. The new law provides the policy framework but does not clarify significant market trading details. That oversight might scare wind investors who have not signed a PPA yet and await the new market regulations.

Furthermore, the Greek wind energy association has asked the Greek government to exempt the wind industry from the tender mechanism for at least a year, thus applying the new policy after Jan.1, 2018. 

According to the latest statistics published by Greece’s electricity market operator (Lagie) in early August, the country has installed 2.604 GW of solar PV, 2.283 GW of wind, 224 MW of small hydro plants and 53 MW of biomass and biogas capacity.