Greece and Cyprus - Minimal growth battles against curtailment

GREECE: Concerns about the government's commitment to renewable energy, heightened by a new tax slapped on green energy producers, have helped dim prospects for Greece's wind energy sector this year.

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And in Cyprus, curtailment of wind farms has become an issue despite the relatively limited installed capacity. Clouding short-term prospects in both of these south-east European countries is a debt and economic crisis.


The Hellenic Wind Energy association (HWEA) still expects roughly 150MW of new capacity could be added in Greece this year after capacity increased 117MW to 1,746MW last year. Greece will need to play catch to reach its 2020 target of 7,500MW of wind capacity.

HWEA president Panagiotis Papastamatious points to increased concerns that the government is not committed to the target laid down in the national renewable energy action plan. As part of a package of austerity measures approved in November, wind and other renewable producers will be charged a 10% extraordinary tax on revenues for 12 months, dated back to 1 July, 2012. "It was a bad message to the market and to companies wanting to invest," says Vassilis Spiliotopoulos, general manager of manufacturing group Gamesa in Greece.

In 2012, Greek wind energy was also overshadowed by solar photovoltaic (PV) power, which saw more than 1,000MW in new capacity installed. Investors focused on PV projects due to an attractive incentive price and a 31 December grid connection deadline for receiving the most generous tariffs. The new 10% tax was initially only for PV projects but was extended to cover wind as well when the PV sector complained.


Cyprus should see wind capacity rise 28MW this year, according to the Cyprus Energy Regulatory Authority (CERA), after adding 41MW to reach 175MW in 2012. The country last year raised the capacity limit to which its current incentive price, or EUR 0.166/kWh for 20 years, will be applied to 175MW from 165MW.

This year could see the announcement of the new incentive payment for capacity over 175MW, expected to be around EUR 0.145/kWh. Yet market participants think the government is in no rush. "We have had a problem with curtailments, and I think they're a little bit cautious about new capacity," says Sylvia Trabert, managing director of developer Wincono Cyprus.

Soaring power prices in the wake of an explosion that destroyed the country's main power plant in July 2011 have led power consumption to decline significantly. "The load is so low now that if the forecast does not match actual consumption, they are curtailing us at night," Trabert says.

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