Demand could force decision soon; Greek contracts

Greece's first private power generation projects are being delayed by disputes over contract terms between the Public Power Corporation (PPC), the state electricity monopoly, and prospective investors in new wind farms that would supply energy to the national grid. Proposals for some 390 MW of wind plant have been submitted for consideration.

Approvals and operating licences have been granted by the energy ministry for private wind farms on the island of Crete totalling 110 MW. However, problems with the power purchase agreement, to be signed by PPC with each autonomous producer of power, are still unresolved. The Greek Association of Aeolic Energy Investment Companies, which represents four would-be auto-producers, says PPC is not only procrastinating over procedural points of the purchase agreement, but has also refused to make a firm commitment on the amount of energy it will buy from each of them.

The PPC's agreement, to run for only ten years, is less flexible than contracts for buying wind kilowatt hours in other parts of Europe, claims the association, and carries few incentives. The PPC agrees the agreement needs revision to take consideration of these complaints and is considering an extension of the contract period to 15 years. The utility admits it is reluctant to commit itself to buying power it might not need.

Demand in Greece, however, is rising so rapidly that PPC may be forced to come to a decision shortly. While demand is increasing in mainland Greece at around 4% a year, it is rising by as much as 7% yearly on both Crete and Rhodes.

The price PPC is to pay for electricity from independent power plant operators is not disputed. Prospective investors say they are satisfied with rates ranging from GDR 16.5/kWh in the mainland to GDR 24/kWh on the islands.

Historically PPC has been reluctant to give up its monopoly on power generation and has not shown a serious commitment to renewables. The utility has its own wind energy operation but this has not progressed beyond setting up experimental demonstration wind plant on several islands -- some of which were completed nearly a decade ago.

PPC's monopoly on power generation was curbed in a 1994 law which allows auto-producers to generate energy from renewable sources, not only wind, but solar and biomass. The law also covers small scale production of energy from hydro sources and allows private co-generation schemes using natural gas and diesel designed for industrial companies to produce for their own needs, selling surplus power to PPC. The law permits energy production by private companies, local authorities, agricultural co-operatives and public enterprises. It obliges PPC to buy all electricity supplied by auto-producers -- provided that the technical infrastructure needed to absorb supplies is available.