Well, they did it. Just a few months after reporting exceptionally strong growth in the solar sector, Athens announced that they would implement retroactive cuts to state subsidies. Like a number of European states, Greece had implemented a number of funding mechanisms over the last decade aimed at spurring solar growth.
However, as the region’s economic reality took hold and massive cuts to government spending became a part of just about everyone along the Mediterranean corridor’s recovery plan, these plans became quick and easy targets.
Like Spain, Greece’s cuts were aimed at reducing the country’s energy deficit. In this case, Athens was taking aim at the Renewable Energy Sources Fund, which is expected to grow to 473 million euros by the end of this year and 905 million euros by the end of 2014. This fund is reserved for supporting renewable energy producers in Greece.
The nature of the cuts became clear this week with an announcement from the Greek Ministry of Environment, Energy and Climate Change (YPEKA) that feed-in tariff rates would be reduced by 40 percent for those projects installed after February 1, 2013 and before January 31st, 2014.
According to a PV Tech report, the cuts will come into effect on June 1st, establishing a new funding system where plants under 100kW will get $122.50 and plants over 100kW will receive $154.75, equally a 44 percent reduction of current levels.
Further, rooftop installations will receive “($161.22) per megawatt with an annual degression of ($6.44) until February 2017 when the FiT will degress bi-annually until August 2019 to ($103.71).”
Athens defended the ministerial action by pointing out that Greece had nearly reached its solar goal of 2.2 GW of capacity after a surge in installations over the last two years.
Again, like Spain, which boasts a significantly more daunting sector deficit, Greece has decided further cuts to subsidy programs are the best way to deal with a mounting energy sector deficit. Athens also unveiled a host of new sector regulations late last summer.
While this has not proven to be terribly successful in Spain, where the energy sector deficit has actually surged as cuts have been introduced, Athens insists the actions are necessary to keep the country’s solar market competitive. Still, it’s unlikely to be an easy process. Even before the new cuts were announced, Athens had been targeted for legal action by the Hellenic Association of Photovoltaic Energy Producers (SPEF). Given the response retroactive cuts have received across the region, they are likely to elicit still more.
Despite such warnings, Greece and some on the European Commission level still believe in a strong national sector. Some, including EC Commissioner of Energy Gunter Oettinger, have suggested that one day Greece could transport its wealth of solar power to the rest of Europe through sprawling projects like the planned Helios facility. The proposed solar plant would offer 10GW of installed power by 2050. However, much like the wider solar sector across the Mediterranean region, momentum behind the Helios project has faded in recent months as dreams (a $27 billion price tag) collided with reality (Greece’s current economic potential.)
In the year since appointing Guggenheim Partners LLC as the project’s financial advisors, the Helios project has gone silent, with little to no coverage of progress. The effort’s official website’s last update was in May of last year.
