In December 2009 the new Minister of Environment, Energy & Climate Change put forward for public consultation a proposal for a new law on renewables. The draft law envisages the acceleration of the development of renewable energy sources and related projects in Greece, in order to address climate change, through the amendment of significant provisions of the currently applicable legislation.

These amendments concern primarily: (a) the licensing of such projects with a view to expediting the relevant process; and (b) increased feed-in tariffs with a view to providing better economic incentives. Although the draft law is a step in the right direction, it has yet to be established whether this new regulatory regime envisaged by the administration will meet the expectations of the market and enable the full exploitation of the significant renewable energy potentials of the country.

Background

Further to the recent establishment of a Ministry of Environment, Energy & Climate Change with obvious powers and competencies, which has replaced in this respect both the Ministry of Environment, Physical Planning & Public Works and the Ministry of Development (these ministries being formerly in charge of environmental and energy affairs respectively but often promoting contradicting policies), the new administration also recently put forward for public consultation a proposal for a new law on renewables.

The draft law envisages the acceleration of the development of renewable energy sources and related projects in Greece, in order to address climate change, through the amendment of the currently applicable legislation, mainly Law no. 3468 of June 2006 on power generation from renewable energy sources and high efficiency cogeneration of heat and power, and the special zoning framework for renewables of December 2008, which is also expected to be thoroughly revised in 2010.

The public consultation lasted one month and attracted great attention from market actors and stake holders, while the new law is anticipated by the spring of 2010 following the above consultation process and discussion and voting in the Parliament. In this context we set out below the main points and critical provisions of the draft law (in relation to the current legal framework) and two schematic diagrams of the current and the envisaged licensing process, based on the flowcharts presented in public by the Minister of Environment, Energy & Climate Change in December 2009.

Main points of the draft law on renewables

National targets and climate change: renewables prioritised

  • The national mandatory target for the share of energy from renewable energy sources in gross final energy consumption is set at 20 per cent by 2020 (instead of 18 per cent provided by Directive 28/2009), while same target for the share of electric energy from renewable energy sources in gross final electricity consumption is set at 40 per cent by 2020. From moderate projections, this means about 10 times more (approximately 12,000 MW) the currently installed capacity from renewable energy sources (1,215 MW) by 2020, in order for Greece to be able to meet these targets.
  • To this end, addressing climate change through the development of renewable energy sources constitutes an environmental and energy national policy priority to be taken into consideration in relation to other environmental or social parameters in case of conflict of interests.

Electricity generation licensing and exemptions therefrom

  • The electricity generation licence from renewables or high efficiency cogeneration, which is the first main licence in the related licensing process and a prerequisite for the environmental terms approval (ETA) of the project in question, will henceforth be granted by the Regulatory Authority for Energy (RAE) instead of the Minister (who can always annul the licence) against technical and economic criteria only, without involving (any longer) the preliminary environmental impact assessment (PEIA) of the project in question (but including the preliminary definition of grid connection requirements by the grid operator), hence reducing the time line for the award of this licence to a maximum of two months from the period of at least six to 12 months it currently takes in practice.
  • Conversely, an electricity generation licence is no longer required for renewable energy projects having a low or zero impact on the environment (according to environmental legislation) regardless of installed capacity, such as all photovoltaic stations and hydro power plants up to 10 MW; hence enabling the fast-track development of this kind of projects.
  • The “electricity generation licences revocation process” provided for by the current legal framework in connection with such licences concerning renewable energy projects which are not also granted an installation licence within 24 months (the second main licence in the related licensing process), subject of course to excused suspension or timely extension, is reconsidered. This process has not been applied in practice anyway and, if applied, it is expected to result in significant controversy and litigation. Instead, the draft law simply provides for these licences to cease to be in force, if the relevant installation licence is not granted within 60 months, always subject to excused suspension or timely extension.

Environmental licensing stages merged

  • For hybrid stations (eg, combined wind and hydro power plants) and renewable energy projects only, the preliminary environmental impact assessment (PEIA), which is currently a prerequisite for the electricity generation licence, and the environmental terms approval (ETA) of the project in question are merged into one stage of environmental assessment and licensing (ie, solely the ETA). The ETA, however, remains a prerequisite for the installation licence together with the final grid connection requirements in the form of an offer from the grid operator and forest intervention approval, where required. Moreover, the ETA is now supposed to be granted within four or two months, depending on the (central or regional) competent environmental licensing authority and the environmental classification (essentially large or small scale size) of the project in question.
  • Any projects that are exempted from the requirement of an electricity generation licence continue to be exempted from the requirement of installation and operation licences, notwithstanding their environmental licensing requirements. However, photovoltaic systems (regardless of installed capacity) and wind turbines installed on buildings or other constructions or within organised industrial areas, as well as renewable energy projects having a low or zero impact on the environment, are also exempted from the requirement of an ETA.

Prerequisites for installation licensing and related issues

  • The aforesaid forest intervention approval, which is very often required for securing land rights over forests or forestry areas especially for wind parks and associated grid infrastructure, is separated from the ETA, presumably in order to prevent overlapping delays attributable to the competent authorities. As regards the grid connection offer, it is supposed to be made within four months and to become final and binding upon the award of the related ETA.
  • Following the receipt of the above prerequisites, an investor can proceed to: the application for the installation licence for the project (to be granted within 15 days or one month depending on the licensing authority and the environmental classification, as above); the application for the grid connection and the power purchase agreements with the (competent) grid operator, which can be signed earlier but will come into effect only after the award of the installation licence; and the application for any building permit required by law, which can be granted before the award of the installation licence.

Rationalisation of feed-in tariffs and PPA term clarified

Further to renewable energy and high efficiency cogeneration power purchase agreements (PPA) which will henceforth have a term1 of 20 years continuously (like equivalent agreements for photovoltaic stations, as introduced in January 2009 by virtue of Law 3734 on the promotion of cogeneration) instead of the 10 plus 10 years term1 (at the option of the producer) currently provided by applicable legislation, the following new feed-in tariffs are also envisaged.

  • Wind projects on islands (inhabited or not) that are not interconnected with the mainland at the time of the application for an electricity generation licence and become inter-connected through special grid connection works that include a subsea cable are entitled to the feed-in tariff for onshore wind projects > 50 kW increased by 25 per cent even after such an interconnection is in place.
  • The above feed-in tariffs will be adjusted simultaneously with the Public Power Corporation’s (PPC) regulated retail tariffs based on the weighted average change in these regulated tariffs. Should PPC’s tariffs cease to be regulated, the above feed-in tariffs will be adjusted annually at a percentage equal to the average change in the electricity consumer’s prices during the previous year. This adjustment is effected in the same way for all these feed-in tariffs, while the percentage is decided by the Minister of Environment, Energy & Climate Change following an opinion from RAE.

Dealing with the NIMBY phenomenon

  • The “renewable energy special duty” retained by the grid operator from the gross revenues from electricity sales of renewable energy producers (ie, 3 per cent before VAT) is partially redirected from the current sole recipient, ie, the local authorities (municipalities and prefectures where the renewable energy project is installed and associated grid connection works are deployed), also to the local communities concerned (through a credit mechanism introduced into their electricity bills) and the Green Fund for Natura 2000 areas, which has yet to be established. The above provision is intended to make local communities friendlier to renewable energy projects development in close proximity to their settlements (or the “not-in-my-backyard” phenomenon), which according to statistics in Greece is the second reason for delays in the development of renewable energy projects due to litigation or other reactions from local communities.

Renewable energy projects zoning revised

  • The regional zoning and sustainable development frameworks of Greece are to give priority to the development of renewable energy sources, while, in the absence of any existing zoning plans or studies that substantiate the maximum possible development of renewable energy sources and take into consideration the special zoning framework for renewables, only the latter applies.
  • Moreover, where the existing regional zoning and sustainable development frameworks, town planning plans or other land use and zoning plans do not address adequately or contravene the guidelines and principles of the special zoning framework for renewables, again only the latter applies in connection with the permissible installation of renewable energy projects.
  • In this context, following the environmental licensing required by the applicable legislation, the development of renewable energy sources will in principle be possible everywhere in Greece, save for: (a) areas of absolute nature protection (with any irreversible environmental impact having been substantiated per technology and installed capacity); (b) declared monuments of world cultural heritage and type A? defined archaeological zones; and (c) wetlands of international importance (under the Ramsar Convention), or the “new exclusion zones” for renewable energy projects development.

Concluding remarks

  • The draft law envisages a significant saving in renewable energy project development time of 18 months (by our own estimates) in connection with the licensing of large scale renewable energy projects like wind parks, from the 36 to 48 months it currently takes in practice for a wind park to be fully licensed in order for construction works to begin. For some renewable energy projects – like photovoltaic stations and solar roof top systems - the licensing time saving envisaged by the draft law could result in such projects being commissioned within six to 12 months.
  • Evidently, the draft law is a step in the right direction to expedite the licensing process concerning renewable energy projects, as well as to address the environmental and zoning issues raised by various public authorities on matters of (often contradicting) competency.
  • Moreover, as a matter of national energy and environmental policy, the development of renewables constitutes the prime instrument to address climate change and therefore meet the national mandatory targets for energy from renewable energy sources and greenhouse gases emission reductions.
  • As regards the economics of renewable energy projects, the draft law provides for significantly increased feed-in tariffs compared to the current ones, especially for small scale renewable energy projects as a matter of distributed generation promotion policy, while investments in large scale projects are also incentivised (eg, for offshore wind parks the increase is 54.5 per cent). Moreover, the subsidies for renewable energy projects are under consideration by the administration and a reform of the subsidies legal framework is also scheduled in 2010, presumably aiming at introducing an even more favourable legal and economic framework for renewables in Greece during the next decade with a view to 2020.

Existing licensing process

Flowchart for renewable energy projects