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Investors roll into sticky Greek market

For two decades, the strong Greek winds have lured wind project developers to its shores with dreams of riches beyond imagination. Most have turned into nightmare battles with bureaucracy in a country where power generation is otherwise in short supply

With a mere 42 MW of new wind power capacity connected in Greece since January, it looks as though 2008 will be only marginally better for the industry than 2007, when just 125 MW went online. Installed wind capacity in Greece has now crept up to 910 MW. For the country to meet its target of 20.1% of electricity from green energy by 2010 and 18% of all energy needs by 2020, an estimated 6000-10,000 MW of wind power will be required. Few now expect the first target to be met and the jury is out on whether the second is feasible.

An estimated 3000 MW of wind projects are held up in the Greek permitting process, stymied by local opposition or insufficient grid capacity. The industry is still waiting for a long promised spatial planning framework for renewable energy to give guidance on where wind plant can be built. The latest news is that it will be issued in the form of a joint ministerial decree this month.

Meantime, anyone objecting to a project can take the case to court on the grounds that no framework exists. That loophole has Greece's biggest wind project to date, 44 MW being built by leading wind company Rokas, tied up in legal knots. Although only 20% of the project at Gantza in the central Fthiotida region remains to be built, further work has to wait until a court verdict. A smaller local owner-operator, Elliniki Technodomiki Energiaki, also reports two projects totalling 49 MW on hold in Lakonia, in the Peloponnese, for the same reason.

The planning framework is part of a national land-use plan which in principle encourages wind power development, says Rokas' Thanasis Tsantilas. It also provides for all inhabited islands to be connected to the mainland grid. "On the other hand there is no reference at all to the increasing need of grid improvements for the connection of renewables," he adds. Even so, the existence of the plan should help improve Greece's notoriously anarchic land development.

Meanwhile, the national grid has little spare capacity for uptake of wind power and upgrades are slow. Transmission operator HTSO recently completed a 400 kV line between Greece and Turkey, which should unlock 200-500 MW of additional wind energy in Macedonia and Thrace once it becomes operational; exactly how much depends on the size of a new thermal plant planned for the region. Construction has also started on a new link to southern Evia, where some 530 MW of wind power could be developed. Local opposition makes forecasting a completion date impossible.

Another issue slowing development is the lengthy consenting process, made worse by the introduction in 2006 of more stringent requirements for gaining a wind power production licence. Tsantilas also blames speculators who are holding on to sites with production licences in the hope of selling them on at a generous profit. "Considerable financing resources are wasted in license trading instead of being used for actual development," he laments. At the same time, chunks of grid capacity are reserved for these projects while others wait for space on the wires.

Despite all the problems, foreign investors are still knocking at the door. Spanish energy giant Iberdrola has bought more than a 70% share of Rokas and is aiming at a complete take-over. Acciona, another Spanish global wind major, has plans to invest EUR 500 million in developing around 350 MW of wind energy in Greece over the next five years (page 8), while last year Spain's Endesa agreed to form a joint venture with local metals and engineering group Mytilineos to create the country's largest independent power producer. This includes Mytilineos' thermal and renewable energy holding plus a portfolio of licences representing 1000 MW.

Italian utility Enel recently bought a 30% stake in the 1400 MW wind energy pipeline owned by the Copelouzos Group, an industrial conglomerate and one of Greece's largest wind developers, and International Constructional SA of the Samaras Group. In July, another Italian utility, Edison, finalised the setting up of a 50-50 joint venture with Hellenic Petroleum, a player in Greece's hydrocarbon industry, to develop more than 1500 MW of generating capacity, making it the second largest operator in Greece's electricity market. The company may also invest in renewables; a target of up to 100-400 MW of wind power and hydro electricity has been mentioned.

From Germany, Deutsche Bank has taken an 80% stake in Deutsche Aeolia in a joint venture with local company Alpha Grissin Infotech. Together they will develop a portfolio of clean energy projects, including 52 MW of wind power in the Peloponnese. France is represented by wind project developer Eolfi, which has agreed to build and operate 148 MW of wind power with Crete-based construction company Domiki Kritis SA and Atese SA, a consultancy and construction firm. Also from France, renewables company Voltalia has formed a joint venture with a local partner to develop 20 plant with a combined capacity of 258 MW.

The attractions

The attractions of Greece for wind power investors are strong winds, good sites, and a power deficit. "Foreign interest has actually grown because of the slow market, with investors buying projects, establishing a position and waiting. Everyone wants to be ready for the starting gun," says Ioannis Tsipouridis, president of the Hellenic Wind Energy Association (HWEA).

One company bucking the trend is Germany's Ostwind, which has pulled out of Greece. Ostwind was developing a 25 MW project in Sidirokastron, near the Bulgarian border, in association with a local partner, but now says it will concentrate its resources elsewhere.

The two main projects completed so far this year belong to global wind farm manager Babcock & Brown (B&B): 18 MW at Garbis and 24 MW at Zefyros, both in the Peloponnese and both comprising Vestas 3 MW turbines. They were commissioned last month. The Copelouzos Group also connected a small 7.2 MW project using Enercon 900 kW turbines to the local, isolated grid in Crete.

Among the other projects likely to start turning this year, Copelouzos expects to connect 18.9 MW in the Peloponnese and 11.05 MW on Rhodes, again with Enercon 900 kW machines. Enercon also provided 24, 2 MW turbines to Elliniki Technodomiki Energiaki for two plant now in their final stages: 27.20 MW at Agia Dinati, on the Ionian island of Kefalonia, and 20 MW near Tripoli in the Peloponnese. Terna, one of Greek's major owner-operators, is currently commissioning 24 MW in central Greece and may squeeze in another 20 MW by year's end. Rokas has two small projects building at Kalogiros in Crete, where six Siemens 600 kW machines are going up, and at Makrirachi in South Evia, where Gamesa is supplying four 850 kW units. Gamesa is also installing 16, 850 kW turbines at Acciona's 13.6 MW Panachaiko II project, at Achaia in the Peloponnese.

Looking further ahead, a government committee is to review the market framework for wind power in Greece. Members include representatives from the wind industry and HWEA. "We have had a first meeting," reports Tsipouridis, "But are waiting to see if it will be any use or just a sop to the industry." The government is also working on a long term energy plan reflecting Greece's EU renewables commitments. A number of drafts have been circulated, indicating that coal will continue to play a major role in the country's energy future.

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