RES as a Growth Tool. By George Kofinakos Country Advisor > StormHarbour UK CEO > Enolia Premium Capital Luxemburg Vice Chairman > Enolia Energy. Contents. RES Globally RES in Greece Growth Barriers in Greece Overview of Policy Instruments for RES Action Plan & De-Risking Conclusion.
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RES in Greece
Growth Barriers in Greece
Overview of Policy Instruments for RES
Action Plan & De-Risking
93.9 tonnes CO2e per capita
Industrialised Nations Average
Source: World Resources Institute.; DB research
Today’s atmospheric CO2 concentrations are higher than they have been for at least 900,000 years
Concentration in 2008: 385 ppm
Global CO2 emissions map
This is a summary of some of the most important arguments for an active renewable energy promotion policy, valid for all countries, though to varying degrees:
The current level of renewable energy in most countries is even lower than would be economically efficient at today's market prices. As newcomers, renewable energy technologies (RET) face a series of market barriers
Many analysts are convinced that the long-term resource scarcity fossil energy faces is still not entirely priced-in. If current prices of fossil fuels reflected their scarcity correctly, RET would become more competitive
The prices of fossil fuels are highly volatile due to short-term changes and incidences in the world's energy markets. Renewables are generally local energies and, as such, provide diversification of the energy mix with a security premium. It is widely agreed that renewables should have a higher share for energy security reasons in the energy portfolio, particularly in oil and gas importing countries
The use of fossil fuels is, to varying degrees, damaging to thehuman health and the local environment. The reduction of these impacts by technical means increases the cost of fossil fuel use. Negative environmental effects (externalities) must be internalized, i.e. reflected in the energy price. All this improves the competitive position of renewable energy technologies
Renewable energy technologies offer prospects for a dynamic industrial policy. In industrialized economies plagued by unemployment and reduced growth perspectives, as well as in some developing countries, RET have proven to be an option of developing industries with a future
The deployment of RET in rural areas in developing countries offers opportunities for the use of local natural resources, employment, and ultimately institutional capacity.
Renewable energy > 30 %
Renewable energy > 20 %
Renewable energy > 10 %
Renewable energy > 5 %
Renewable energy < 5 %
Worldwide Energy Consumption
Worldwide Renewables Investment
Annual worldwide clean technology investment
is expected to reach $450bn by 2012 and $600bn by 2020
Global Energy Mix
Greece’s Energy Mix
Applications are submitted in the 1st 10 days of even months
Application for Installation License
Compatibility with the
National RES framework/
& County Council
Preliminary Connection Terms
Submit EIA Study
Application for intervention in forest area
Application for final Connection terms
MAA:Ministry of Agricultural Affairs
SEA:Special Environmental Authority
MEECC:Ministry of Environment, Energy and Climate Change
RAE : Regulatory Authority of Energy
HTSO:Hellenic Transmission System Operator
DDP : Direction of Development and Planning
DRP :Direction of Regional Planning
EIA : Environmental Impact Assessment
ETA : Environmental Terms Approval
The assessment of the current state of Greece's energy sector is rather devastating ("high energy consumption, low fuel efficiency, low labor and capital productivity and an expensive energy mix characterize the Greek energy sector"). Consequently, the sector should be turned around to offer significant potential. Action should be taken in the form of the following steps:
fragmentation and small scale of business across sectors - over regulation of markets and professions - complex and restrictive licensing and operating processes - lack of integrated and systemic zoning and real estate planning - highly complex and volatile tax framework
large, expensive public sector with low quality outputs - lack of mechanism to inject market -sourced management and technical talent
low rates in youth and female employment - binding and inflexible collective agreements - disconnection between market and education
overabundance of laws sometimes conflicting - heavy administrative burden in courts, resulting to long lead times
extensive tax evasion - substantial wealth from the black economy
investment tax credits
production tax credits
reductions in sales,
energy, carbon, excise, VAT
annual income tax credit based on the amount invested or the amount of electricity generated
reduction in taxes on the purchase (or production) of renewable energy technologies
capital grants - third-party finance - investment tax credits - property tax exemptions - production tax credits - sales tax rebates - exercise tax exemptions
one-time payments by the government to cover a percentage of the capital cost of an investment
direct payment from the government per unit of renewable energy produced
assists funding distribution for
Public Investment, Loans, Grants
Public Competitive Bidding
Price-guaranteeing regulatory policies
Market share-ensuring regulatory policies
Launch awareness campaigns on energy efficiency benefits, costs of buildings and transportation
Create a Stock-Exchange RIC for RES or establish a Local Fund specialized in RES with Government Guarantees
Exploit Renewable Energy Hubs all over Greece with existent licenses and supportive framework ready to be constructed by Investors
Revisit incentives for retrofits (e.g. tax rebates instead of subsidies)
Accelerate the implementation of financially viable island interconnections to reduce costs and emissions
Investigate the viability to locally manufacture renewable energy parts and equipment
Create Supportive Policy and Institutional Frameworks
Promote Private Sector Involvement
Level the Playing Field
Build Projects Around Local Needs and Capacities
Use structural funds and framework programmes better
Increase use of funds from the European Investment Bank and other public finance institutions
Improve access to Risk Capital
Coordinate Community and National funding and other forms of support
Upgrade Smart Grid
Support Helios Project as a strategic investment
Interconnect Universities with RES business to provide technical resources
Prioritize high local renewable investors
Risk is a key parameter in explaining the difficulties of RES technology and projects when accessing capital due to the specific risk/return ratio for RES projects. To reduce financing risks, access to low-cost finance should be increased through an extended use of –sometime innovative- measures.
The mitigated risk scenarios in these cases indicate that the annual consumer expenditures can be reduced by 50%.
Reducing the cost of capital will result in lower consumer expenditures and an accelerated uptake of RES. The main approach is to reduce risk at all stages in the project lifecycle, via:
Ensuring a long-term commitment towards renewable energy
Removing deployment barriers
Sharing risk via improved financial instruments
e.g. government loan guarantees and/or project participation
The benefits of a pro-active and participating government are manifold and have a significant impact on the access to capital and its costs:
in either equity, (subordinated) debt, or mezzanine finance form
by bringing down the regulatory risk
the percentage of project initiatives to be actually realized would increase - this would strengthen the confidence of the market
via government participation, part of these profits flow back to the treasury
through the better insight obtained of the challenges and barriers the market is facing, the government could develop a policy e.g. for mobilizing the industry supply chain
The appropriateness of financial instruments is highly dependent on technology or the project’s development stage. Current perceptions indicate that access to finance can be enhanced by innovative public-private approaches for equity provision to technology developers, and on guarantee mechanisms for project developers
Some innovative instruments such as guarantees or mezzanine funds can have a significant multiplier effect as they contribute to cover technical and political risks (certainty for investors). From the perspective of debt and equity providers, there are no one-size-fits-all solutions, but rather a mix of instruments that will be appropriate to specific levels of maturity of technologies or projects, and to various country-specific contexts
Greece clearly has the potential (Solar, Wind, Water)
of becoming the Saudi Arabia for Renewables in Europe.
To achieve this goal, it only needs
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