Investors swarm around Greek honey pot -- Political hesitancy still palpable

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Greece has good wind potential, an attractive market structure and no shortage of investors jostling for projects, but a long and complex permitting process exacerbated by an absent government strategy on where to site wind plant has long stymied progress. Just 114 MW of new wind capacity went online in 2008, down on last year's 125 MW, bringing the national total to 985 MW (table). Things might be looking up, however. A long awaited law establishing where renewable energy installations can be built was passed in November and now the new development minister, Costis Hatzidakis, has declared 2009 to be Greece's "year of renewable energy."

Hatzidakis got the year off to a good start by announcing a halt to building any new coal-fired or nuclear power stations. He also wants to "start a new dialogue" about the country's energy strategy, including how to increase local acceptance of wind power and speed up its development. Minds are being focused by the EU renewables directive, which requires Greece to source 18% of its energy from renewables by 2020, compared with 11% today. To meet the target, 30-35% of electricity must be green by then.

Exactly where wind power projects can be built -- and where not -- has become clearer with a spatial planning framework for renewables finally on the statute books. The plan identifies three "wind priority areas" where plant totalling around 5 GW could be built: 960 MW in northern Greece; 3238 MW in central Greece, including Evia island; and 876 MW in the Peloponnese. The rest of the mainland is largely categorised as "suitable" for wind installations, while the isolated islands of the Aegean, Ionia and Crete, harbouring a potential resource of over 14 GW, are subject to tighter restrictions. In priority areas, the maximum density allowed is one turbine for every 405 hectares On the islands it is one per 810 hectares. The islands are more crowded and must be preserved for tourism as well as environmental and cultural reasons, the government argues.

More controversial is the introduction of a minimum distance between turbines of at least 2.5 times the diameter of the blades. A ban on installing turbines on "high productivity agricultural land" met with equal bewilderment, given the machines' small footprint. Other restrictions apply to building near archaeological sites, "traditional settlements" and "cultural monuments."

But the plan is welcome. Up to now, anyone objecting to a project could take the case to court because a planning framework did not exist. As a result, dozens of wind power projects are languishing in the courts. Many will have to be redesigned to meet the new guidelines, but more consistency in the way local authorities make decisions is now expected. Some still fear problems. "Already the minister of tourism is asking for so much extra information; developers need an archaeologist on the team," says Ioannis Tsipouridis of the Hellenic Wind Energy Association (HWEA). The real key is to simplify the licensing process.

Looking at 500 MW in 2009

On this front, discussions continue on Greece's long term energy policy and establishing a new legal framework to encourage further investment in renewables. "The energy debate is mainly a political debate," says Achilles Plethora's of the Greek World Wildlife Fund. But at least now both the government and opposition have come out in favour of renewable energy, he adds.

Despite the difficulties, project development has jogged along. Among the bigger projects completed last year, the troubled global wind farm manager Babcock & Brown completed two plant in the Peloponnesus: 18 MW at Garbs and 24 MW at Zephyrus. Tern, one of Greek's major owner-operators, also brought 24 MW online near Nafpaktos in the Akarnania region. This year might see at least 500 MW come online. Already, Copelouzos, now part-owned by Italy's Enel, has completed 18.9 MW in the Peloponnese, while local owner-operator Elliniki Technodomiki Energiaki added 27.2 MW on Kefalonia. Elliniki expects to add another 50 MW, as does British-based renewable energy investor Good Energies, through its local subsidiary Jasper Wind. Terna reckons it could complete 180 MW or so in 2009, while EDF EN reports 154.6 MW under construction and Swiss developer RenInvest is building 28.9 MW near the northern city of Florina, scheduled to start turning by the end of the year.

Old and new players

A number of major foreign investors either entered or upped their stake in the Greek market in 2008, attracted by a premium purchase price and the sheer volume of development required to meet the EU targets. The standard price for major wind plant on islands not connected to the grid is currently EUR 91.74/MWh and EUR 80.14/MW elsewhere, guaranteed for 20 years. "If developers just get one wind plant built it is a very good investment," says Vassillis Spiliotopoulos of Spain's Gamesa. So far, Greek banks have also proved willing to finance projects thanks to the stable, guaranteed income.

Among those companies increasing their investment, Italy's Enel bought a 30% stake in Copelouzos' project development portfolio, with the option to increase its holding to a maximum of 80%. Copelouzos has 1400 MW in the permitting process and recently gained site approval for an 188 MW project on south Evia. Likewise, Iberdrola completed its takeover of Rokas at the end of 2008. Rokas Renewables has 200.3 MW of operating wind power and holds production licences for 500 MW and the final installation licence for 38 MW, scheduled for commissioning in 2010.

Acciona Energia, another Spanish company with a global reach, plans to invest EUR 500 million developing around 350 MW in Greece over the next five years. Acciona will commission 13.6 MW at its Panahaiko site in the Peloponnese this summer, bringing the total installation to 48.5 MW, and a further 9 MW at Lykosterna, near Mount Parnassos to consist of six AW-77 1.5 MW units, the first Acciona turbines to be erected in Greece. And French asset management company Eolfi recently launched two infrastructure funds dedicated to Greece, for which it hopes to raise EUR 31 million. Alain Delsupexhe, founder and president of Eolfi, considers Greece to be one of Europe's most interesting wind markets (Windpower Monthly, January 2009).

Local companies are also putting up significant amounts of cash. Greece Public Power Corporation (PPC) is to invest EUR 2.1 billion in renewables over the next six years through its subsidiary PPC Renewables. It is aiming at a market share of 20% of renewables by 2014, representing 950 MW of installed capacity. Of this, wind power projects totalling roughly 250 MW have been identified so far. PPC Renewables currently owns around 50 MW of operating wind capacity.

Alpha Grissin Infotech, a firm active in business technology and real estate, is one of several Greek companies that entered the wind market in 2008. It has applied for production licences for a total of 90 MW and is about to submit applications for another 60 MW on its home turf in the Peloponnese. FG Europe, a Greek producer of domestic electrical appliances and mobile phones, is also branching into renewables and plans to invest EUR 250 million in developing or buying around 430 MW in Greece and southeast Europe by 2010 (Windpower Monthly, October 2008). The latest newcomer is the Iktinos Group, active in marble quarrying, which is targeting ownership of 150-200 MW in the next three years.

Network issues

Much-needed improvements to the grid are slowly taking shape. A new 400 kV line linking Greece and Turkey is now complete, although it will take at least another year before the extra-high voltage substation is in place. The line should eventually unlock around 500 MW of additional wind energy in Macedonia and Thrace. Progress has also been made on the much-delayed link to southern Evia. The line across the island should be finished by the end of the year, but there is now a problem about the cost of the connection to the mainland. The transmission system operator, HTSO, is in negotiation with contractors and the government about how to finance it. For its part, PPC plans to invest over EUR 4 million in upgrading and extending the transmission and distribution networks.

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