Greece to auction 2.6GW of wind and solar by 2020

The Greek government has a launched a first-of-its-kind auction programme, with an estimated value of approximately €3 billion, which aims to attract investment in the country’s renewable energy sector and to help meet its target of producing 18 percent of energy supply from renewables by 2020.

“There is a dramatic change in the regulatory scheme in support of renewables,” Dimitris Assimakis, an Athens-based partner at Norton Rose Fulbright, told Infrastructure Investor.

“The idea is that we’re going toward more market-based mechanisms, such as feed-in premiums, which by definition are more market-based than the old regime of guaranteed feed-in-tariffs,” he explained.

Unlike fixed feed-in-tariffs, sliding-scale FiPs fluctuate according to market prices to avoid either over- or under-compensation of projects.

“The FiP will be added as a premium to the revenues received by renewable generators through their participation in the wholesale electricity market, topping up revenues in order for the relevant operating aid to reach an acceptable level of support measured against a technology-specific reference tariff (RT),” according to a Norton Rose Fulbright briefing.

The Greek Ministry of Environment and Energy has set the RT (strike price) for wind capacity at €90/MWh and for solar at €85/MWh. “Auction participants will have to bid lower than this,” Assimakis explained.

The first two auctions, which will be held on 2 July, will tender 300MW of wind capacity and 300MW of solar PV capacity. Another joint auction for both wind and solar projects totalling 400MW is slated to take place before the end of the year, although no specific date has been set. Three more auctions with a similar format and capacity will follow in 2019, while another 600MW of wind and solar capacity will be tendered separately in 2020.

“There is a lot of interest in the auctions,” Assimakis remarked, noting that interested parties include both established Greek strategic players as well as foreign investors.

“This, of course, is a combination of things,” he said. “First, is the fact that you now have a detailed framework for the auction scheme and that helps a lot because people now have visibility. But also, the country’s macroeconomics are better, so the investment climate has improved. This is not limited to the renewables sector but applies across all economic sectors.”

However, Assimakis expects to see more Greek companies participate in the July auctions given the government’s delay in finalising the regulatory framework.

“The scheme was finalised just one month ago and the deadline for registering for the upcoming auctions is 5 June,” he said. “So, there’s not that much time – at least in the first round of auctions – to see many ‘new faces’. I would therefore expect that most of the participants would be established players in the Greek market, such as Terna Energy, one of the largest wind power producers in the country.”

Debt financing is not an issue, either. Greece’s four major commercial banks – Alpha Bank, Eurobank, National Bank of Greece and Piraeus Bank – are committed to financing these projects, according to Assimakis. They do so either on their own or in syndication with international financial institutions, such as the European Investment Bank, EBRD or the IFC.

In March 2017, EBRD pledged to commit up to €300 million to the Greek renewables sector.

“Of course, we don’t have foreign commercial banks active in the Greek market at the moment, but we do expect to see more of them financing Greek renewable projects in the future,” he said. “They want to finance projects, the big players want to participate. This is the new era.”