With a new renewable energy law, impressive targets and a feed-in tariff in place, solar PV could provide electricity to half a million of households in Greece by 2020, according to projections of the European Photovoltaic Industry Association – provided that the right measures are in place to promote it to the end-user. If all goes well, over 65,000 jobs are expected to be created in the PV sector within Greece. Jackie Jones attended the PV MED conference in Athens.Greece is poised to be Europe’s next high-growth market for solar PV and, like racing cars revving up on the grid and waiting for the start lights, businesses are getting ready to accelerate forward and jockey for position. ‘At least a hundred new companies have entered the sector in the last six months’, says Stelios Psomas of the Hellenic Association of Photovoltaic Companies. ‘This is an emerging €4 billion market’.
Driving that market is Greece’s feed-in tariff for PV, introduced as part of Law 3468 for RES and HE-CHP (high efficiency combined heat and power), effective since 27 June 2006.
While this law also stipulates feed-in rates for other renewables and CHP, solar is the star, with a generous €0.45/kWh available for new installations up to 100 kW (€0.50 for islands off the interconnected grid), and 0.40/kWh for those of 100 kW or above (€0.45 for islands off the interconnected grid). What’s more, generous subsidies are potentially available to cover the capital cost of new installations. Greek Vice-Minister for Development, Mr Ioannis Papathanassiou, told the PV-Med conference, held in Athens on 19 and 20 April, that the new Law for Development stipulates that an investment in renewable systems may be eligible for a subsidy of up to 60% of the investment cost.
Greece has set an indicative target of at least 700 MWp of PV by 2020 – 500 MW for mainland interconnected systems, and 200 MW for the non-interconnected islands (EPIA anticipates that it could exceed 1200 MW). This forms part of the national strategy for renewable energy to contribute 20.10% of the total electricity production by 2010, and 29% by 2020.
Growing a strong photovoltaics market makes a lot of sense for Greece, for several reasons. The country has an excellent solar resource, and a well established solar thermal sector. While that is a quite different technology, it means nonetheless that there is pubic commitment to, and familiarity with, one of the solar options.
The nature of Greece’s power usage and power supply mean that PV can offer benefits. In particular, it will help meet the summer afternoon demand peaks arising from cooling load – PV output can match these well, contributing to the security of supply at these times without the need for construction of other fossil-based peaking power plant.
Greece is by no means new to solar PV. At the end of 2006 an estimated 6-10 MW was installed (figures vary), but about three-quarters of this was in stand-alone applications – a lot of them telecoms-related. In 2005 (according to Stathis Tselepis of CRES) production of power from PV in Greece was 5.9 GWh, rising to 6.5 GWh in 2006. The same year, turnover was valued at approximately €4.5 million, with between 80 and 90 people employed in the industry.
Greece has two PV module manufacturers – Energy Solutions SA, which commenced production of crystalline silicon modules in February 2005. Its production in 2005 was 1 MWp, and in 2007 this is anticipated to reach 10 MWp. A second company, Solar Cells Hellas SA has a new factory for crystalline PV cells and modules now under construction (capacity ~30 MW/year), with production due to commence before mid 2007. Several other companies are involved in the manufacture of inverters and charge controllers, for grid-connected and stand-alone applications. At present, says Tselepis, approximately 30 companies are involved in the marketing of PV modules, balance of system components and the design and installation of PV systems – a number which is expected to grow rapidly through 2007 and 2008.
Now, there is huge interest from all sectors of the market: manufacturers, wholesalers, retailers, integrators, project developers, consultants, as well as the financial sector (banks and insurers), according to the Hellenic Association of Photovoltaic Companies.
Also, Greece not only has a growing demand for power, but rapidly increasing CO2 emissions, which the introduction of solar PV on a large scale can help mitigate. (In response to the Kyoto Protocol, Greece agreed to limit the net increase in its greenhouse gas emissions to 25% above the 1990 levels by 2008-2012; part of the EU ‘burden-sharing’ agreement.)PV for the islands
As well as an extensive mainland, the Greece has a large number of islands, varied in size, that are home to about 10% of its 10 million-plus population. (Island population often peaks in summer due to tourism and the seasonal migration patterns of those involved in tourism-related employment.) PV electricity is particularly suitable for these locations as it is already cost-competitive on small to medium-sized islands, says Stathis Tselepis of CRES, the Centre for Renewable Energy Sources.Impacts on transmission
While some developers have voiced concerns that the grid in parts of Greece is not really stable, and so may not be able to accommodate large amounts of PV easily, Yannis Kabouris, Director for System Planning with Hellenic Transmission Service Operator (HTSO) is confident. He has worked with renewables for two decades and believes that solar can be accommodated on the grid, with certain provisos. In fact, the distributed nature of PV can help stabilize the grid, he says, partly because it can match peak loads, but also by helping reduce losses. This distributed energy should also lower the need for transmission expansion.Need for clarity
If the feed-in tariff is six months old, then why is the industry still on the starting grid? The reason is that there are still issues to be sorted out, with the main area of uncertainty being just how long the feed-in tariff is guaranteed for. The wording of the new law appears unclear, and one clause suggests that the rate could be changed after the start of the programme, depending on the scope of the programme. While the industry is fairly sure that the government is making a firm commitment to PV, there is still a need for assurance before financial commitments are made. Psomas believes that investors can be more relaxed, although as one potential developer commented: ‘Try telling that to the bank!’.
The indications are that the rate is intended to be fixed for 20 years. Power purchase agreements are designed to be for 10 years initially, extendable unilaterally for a further 10 years. That should mean that a plant owner/operator can unilaterally extend its contract with the utility. However, less-than-complete clarity on this issue is causing a hold up.
The tariff will be adjusted annually to take account of increases in retail electricity prices or the inflation rate, and it is expected that, in the future, the rate for new installations may be reduced.
In the conference session that was dedicated to the Greek market, various speakers – and members of the audience – presented a host of stories showing that Greece still has some work to do in smoothing the way for PV implementation. There were countless tales of going from office to office for appropriate permissions, only to find that nobody knew how to process the applications. There was further confusion about putting installations on ‘prime agricultural land’ – this is not supposed to happen, but as there is no categorization of land as ‘prime’ or otherwise, no applications can go ahead. One developer, who has been putting large installations on academic and industrial rooftop sites for some time, reported that he had finally received an official ministry letter that said no such installations could be ‘legal’. The overall call was for a ‘one-stop shop’ to simplify and ease the process, so that the government’s stated intentions could actually be achieved.
While no permits are needed for installations under 150 kW, domestic applications are disadvantaged in two ways: first, they are not as yet eligible for any grants. Second, although a small tax deduction is available (capped at €700 per system), homeowners or individuals who wish to receive this cannot do so unless they form a company and administer their rooftop PV installation through that – no matter how small it may be. This, of course, presents the general public with a considerable barrier.Mind your speed
As things stand, 13 years’ worth of growth (700 MW by 2020) look set to be achieved in a much, much shorter time. Already the RAE (a Regulatory Authority for Energy that grants installation licences) reports that it has received 111 applications for projects on mainland Greece of over 1 MW in size, totalling no less than 434.13 MW.
RAE has also issued licences for 333 mainland-based plants below 150 kW, totalling 34.94 MW. It is also expecting a strong response to the forthcoming call for applications for island-based systems below 150 kW.
While everyone involved wants the sector to take off, many industry insiders are concerned that things may be about to move unhealthily fast. It seems particularly the case for those who have been lobbying for, and working towards, the introduction of new market mechanisms in Greece. ‘It’s a bit like praying for a refreshing shower and then seeing a deluge on its way’, said one.
The main concern is that new market entrants with little or no experience will not deliver the right quality of installation to ensure sustainable growth – and this could harm the reputation of the technology and the sector. Stelios Psomas is also concerned about promises of ‘free money’ offered by capital investment subsidies. Unless handled very carefully, that practice is open to corruption – he believes a black market in RAE installation permits had developed within a mere two days of subsidy announcements by the Vice-Minister for Development. EPIA Secretary General
The European Photovoltaic Association’s Eleni Despotou is also concerned. ‘I’m worried we may experience a bubble’, she said. ‘Slow, steady growth is what is needed.’Steps needed
At the conclusion of the PV-Med conference, the organizer EPIA made eight proposals that were adopted by the participants. These are concrete measures that could be adopted in Greece in order to further develop its PV market:
- Simplify the licensing process for PV installations: the public administration bodies need to be better informed, and co-operation between the different administration services needs to be introduced in order to lift bureaucratic barriers.
- The state should not adopt any legislation that might limit the use of PV in the building sector.
- There is a need to open up the PV market in Greece towards householders. This means that every individual must be able to install a PV system, connect it to the grid and sell the electricity produced; without being considered a small business and encountering difficulties with taxes.
- Existing support mechanisms should be clarified, as well as the conditions that need to be met to qualify for subsidies.
- The public administration should have access to clear and simplified instructions for implementing the existing law in relation to PV applications licensing procedures.
- The grid connection procedure for PV systems need to be simplified. A concrete technical framework, plus a fair timescale and fee for grid connections, should be set up.
- In order to secure stable investments, the price per kWh of PV electricity must remain stable throughout the whole period of the contract. Contract duration is set for 10 years and can be renewed for another 10 years.
In conclusion, EPIA noted that applications submitted to RAE (Greek Electricity Regulatory Authority) could well amount to the twice or the three times the target set by the Greek government (700 MW). However, experience from other EU countries shows that only 20%-40% of submitted applications are actually realised. Even so, this represents impressive growth for a country that until now, was barely on the PV radar.
Jackie Jones is Editor of Renewable Energy World
PV for the mediterranean
By 2020, PV could provide a power supply for over 26 million households in the Mediterranean region, simultaneously creating thousands of new jobs, according to the European Photovoltaic Industry Association (EPIA), at the 2nd Photovoltaic Mediterranean Conference, which took place in Athens on 19-20 April. It attracted over 500 participants from throughout the region, including speakers evaluating the potential for PV not only in the already vibrant markets of Italy and Spain (and Greece) but also the countries of the eastern Mediterranean and North Africa.
In 2006, EPIA estimates that photovoltaic energy supplied 400 GWh of electricity all over the Mediterranean, while it expects that in 2010 it will amount to 5 TWh and 78 TWh in 2020.