Renewables in Greece Investing in Aiolos Dr. Ioannis Tsipouridis - - PowerPoint PPT Presentation

• Dr. Ioannis Tsipouridis

Chairman & C.E.O. RED Pro Consultants

Renewables in Greece Investing in Aiolos

CONTENTS

• 1. INTRODUCTION
• 2. THE DRIVERS
• 3. THE EU DIRECTIVE TARGETS
• 4. THE IM PLICATIONS for GREECE
• 5. STATISTICS and DATA of THE GREEK WIND M ARKET
• 6. STATISTICS and DATA of THE GREEK PV M ARKET
• 7. INVESTING IN RENEWABLES: THE CASE FOR AIOLOS

PRESENT PERSPECTIVES

• 8. CONCL

USIONS

• 9. ANNEXES A, B & C

CONTENTS

• 1. INTRODUCTION
• 2. THE DRIVERS
• 3. THE EU DIRECTIVE TARGETS
• 4. THE IM PLICATIONS for GREECE
• 5. STATISTICS and DATA of THE GREEK WIND M ARKET
• 6. STATISTICS and DATA of THE GREEK PV M ARKET
• 7. INVESTING IN RENEWABLES: THE CASE FOR AIOLOS

PRESENT PERSPECTIVES

• 8. CONCL

USIONS

• 9. ANNEXES A, B & C

THE REAL DRIVER FOR RES DEVELOPM ENT

Our climate is changing fast. If we don’t change, we will perish. The only solution lies in the immediate, drastic reduction of CO2. The best way to achieve this is by the immediate, fastest and greatest development

• f Renewables.

CONTENTS

• 1. INTRODUCTION
• 2. THE DRIVERS
• 3. THE EU DIRECTIVE TARGETS
• 4. THE IM PLICATIONS for GREECE
• 5. STATISTICS and DATA of THE GREEK WIND M ARKET
• 6. STATISTICS and DATA of THE GREEK PV M ARKET
• 7. INVESTING IN RENEWABLES: THE CASE FOR AIOLOS

PRESENT PERSPECTIVES

• 8. CONCL

USIONS

• 9. ANNEXES A, B & C

THE 2 DEGREES LIM IT TO AVOID CATASTROPHE

THERE ARE SERIOUS DOUBTS THAT WE WILL STAY BELOW 2o C

THE SIGNS OF IM PEDING DISASTER ARE OBVIOUS TO SEE

THE SIGNS OF IM PEDING DISASTER ARE OBVIOUS TO SEE

EVEN SYSTEM IC M EDIA RECOGNISE THE SEVERITY OF THE SITUATION

M AJ OR FINANCIAL CENTERS SPELL THE ECONOM IC DISASTER

THE ECONOM IC DAM AGE IS HUGE

The cost runs in the trillions $

Who can argue with the Economist?

POLITICIANS, ARTISTS, FINANCIERS J OIN IN THE CALL FOR ACTION, NOW!

USA is taking the lead.

Even energy conservative centers (IEA) accept the facts… .

… . Although they underestimate them.

The change is beginning to happen.

And the change is global.

The effects are already measurable.

The renewable-energy boom is here. About $8 trillion, or two thirds of the world's spending on new power capacity over the next 25 years, will go toward renewables!!!! There are six massive shifts coming soon to power markets: Trillions of dollars will be invested over the next 25 years, driving some

• f the most profound changes yet in how humans get their electricity.

New forecast by Bloomberg New Energy Finance.

Climate change is interpreted in harsh financial terms and leads to a global economic restrt..

• 1. Solar Prices Keep Crashing

The price of solar power will continue to fall, until it becomes the cheapest form of power in a rapidly expanding number of national markets. By 2026, utility-scale solar will be competitive for the majority of the world, according to BNEF . The lifetime cost of a photovoltaic solar-power plant will drop by almost half over the next 25 years, even as the prices of fossil fuels creep higher. Solar power will eventually get so cheap that it will outcompete new fossil-fuel plants and even start to supplant some existing coal and gas plants, potentially stranding billions in fossil-fuel infrastructure. The industrial age was built on coal. The next 25 years will be the end of its dominance.

With solar power so cheap, investments will surge. Expect $3.7 trillion in solar investments between now and 2040. Solar alone will account for more than a third of new power capacity worldwide.

• 2. Solar Billions Become Solar Trillions

Electricity capacity additions (Gigawatts): Source: BNEF

• 3. The Revolution Will Be Decentralized

The biggest solar revolution will take place on rooftops. High electricity prices and cheap residential battery storage will make small-scale rooftop solar ever more attractive, driving a 17-fold increase in installations. By 2040, rooftop solar will be cheaper than electricity from the grid in every major economy, and almost 13 percent of electricity worldwide will be generated from small-scale solar systems. Rooftop (small-scale) solar in yellow. Renewables account for about two-thirds of investment over the next 25 years.

• 4. Global Demand Slows

Growth in demand for electricity is slowing because of efficiency. Even as people rise from poverty to middle class faster than ever, BNEF predicts that global electricity consumption will remain relatively flat. In the next 25 years, global demand will grow about 1.8 percent a year, compared with 3 percent a year from 1990 to 2012. In wealthy OECD countries, power demand will actually decline. This watercolor chart compares economic growth to energy efficiency. Each color represents a country or region. As economies get richer, growth requires less power.

The Beauty of Efficiency

Natural gas won't be the "bridge fuel" that transitions from coal to renewable energy. The U.S. fracking boom will help bring global prices down, but few countries will replace coal plants with natural gas and developing countries will opt for some combination of coal, gas, and renewables. Even in the fracking-rich U.S., wind power will be cheaper than building new gas plants by 2023, and utility-scale solar will be cheaper than gas by 2036. Fossil fuels will retain a 44 percent share of total electricity generation in 2040 (down from two thirds today), much of which will come from legacy plants that are cheaper to run than shut down. Developing countries will be responsible for 99 percent of new coal plants and 86 percent of new gas-fired plants between now and 2040.

• 5. Natural Gas Burns Briefly

• 6. The Climate Is Still Screwed

The shift to renewables is happening shockingly fast, but not fast enough to prevent perilous levels of global warming. Without additional policy action by governments, global CO2 from the power sector will continue to rise until 2029 and will remain 13 % higher than today's pollution levels in 2040. That's not enough to prevent global warming to rise more than 2 degrees Celsius. That's considered the point-of-no-return for some worst consequences of climate change.

CONTENTS

• 1. INTRODUCTION
• 2. THE DRIVERS
• 3. THE EU DIRECTIVE / TARGETS
• 4. THE IM PLICATIONS for GREECE
• 5. STATISTICS and DATA of THE GREEK WIND M ARKET
• 6. STATISTICS and DATA of THE GREEK PV M ARKET
• 7. INVESTING IN RENEWABLES: THE CASE FOR AIOLOS

PRESENT PERSPECTIVES

• 8. CONCL

USIONS

• 9. ANNEXES A, B & C

THE EU DIRECTIVE / TARGETS

THE EU DIRECTIVE / TARGETS

THE EU DIRECTIVE / TARGETS

THE EU DIRECTIVE / TARGETS

THE EU DIRECTIVE / TARGETS

THE EU DIRECTIVE / TARGETS

THE EU DIRECTIVE / TARGETS

THE EM ISSIONS REDUCTION TARGET FOR 2050

The European RES targets create a positive Investment environment

THE M EANS TO ACHIEVE THE TARGET IN ENERGY

THE M EANS TO ACHIEVE THE TARGET IN ELECTRICITY

European RES development 2005 to 2020 European RES development 2005 to 2020

The European RES targets create a positive Investment environment

European individual technologies development 2005 to 2020 European individual technologies development 2005 to 2020

The European RES targets create a positive Investment environment

THE EU DIRECTIVE / RESUL TS

The European RES targets create a positive Investment environment

CONTENTS

• 1. INTRODUCTION
• 2. THE DRIVERS
• 3. THE EU DIRECTIVE / TARGETS
• 4. THE IM PLICATIONS for GREECE
• 5. STATISTICS and DATA of THE GREEK WIND M ARKET
• 6. STATISTICS and DATA of THE GREEK PV M ARKET
• 7. INVESTING IN RENEWABLES: THE CASE FOR AIOLOS

PRESENT PERSPECTIVES

• 8. CONCL

USIONS

• 9. ANNEXES A, B & C

Overall target : 18% of share of energy generated from renewable sources in gross

final energy consumption:

Heating and cooling: 20% of heat consumption met by renewable sources; Electricity: 40% of electricity demand met by electricity generated from

renewable energy sources;

Transport: 10% of energy demand met by renewable energy sources.

EU M ember State 2006 2007 2008 2020 Target % To cover:

Greece 7.2 % 8.1 % 7.9 % 18 %

10.1 %

Germany 6.9 % 9 % 8.9 % 18 %

9.1 %

Denmark 16.8 % 18.1 % 18.7 % 30 %

11.3 %

Portugal 20.5 % 22.2 % 23 % 31 %

8 % Share of renewable consumption to gross final energy consumption.

Comprises of direct use of renewables (e.g. biofuels) plus energy produced from renewables (e.g. wind, hydro). Final energy consumption is the energy that households, industry, services, agriculture and the transport sector use.

The desired renewable mix (2014/ 2020) M inisterial Decree, Oct. 2010

Technology Actual Targets Actual End 2009 2014 2020 Jun 2014 Hydro 3201 3700 4650 3238 Small (0-15MW) 183 300 350 220 Large (>15MW) 3018 3400 4300 3018 Photovoltaics 53 1500 2200 2588 Roofs (10 kW) excl excl 372 Rest 53 1000 1450 2216 CSP 120 250 Wind (including offshore) 1167 4000 7500 1866 Biomass 43 200 350 47,1 Geothermal 120

Investments needed (2010-2020)

The overall investments needed in the greek energy sector are estimated to 22.2 billion euro for

the 2010-2020 timeframe

From these 16.5 will go to new RES capacity, nearly 7 billion to wind, 5.5 billion to PV, 1.6

billion to pump storage for supporting the variable RES production, 1.1 billion to solar heating

and cooling, 0.5 billion to biomass and biogas projects On fossil fuels, Greece will spent 2.1 billion euro for new «clean coal» (lignite in our case) power plants while 3.3 billion will be invested in natural gas facilities Details of the total budget needed for 2010-2020 are shown on the next table, while an n additional additional budget budget

• f
• f

5 5 billion billion euro euro will will be be needed needed for for grid grid reinforcement reinforcement and and island island interconnections interconnections

Investments needed (2010-2020) Investments needed (2010-2020)

• Mil. euro (2005)

Total 2010-2020 Lignite 2.100 Natural gas 3.311 Oil 249 Large hydro 650 Small hydro 137 Pump storage 1.672 PV 5.508 Solar thermal 1.120 Wind 6.710 Geothermal 264 Biomass/biogas 530 Total 22.252 from which RES 16.455

Investments needed (2010-2020)

Additional Investments needed (2010-2020)

CONTENTS

• 1. INTRODUCTION
• 2. THE DRIVERS
• 3. THE EU DIRECTIVE / TARGETS
• 4. THE IM PLICATIONS for GREECE
• 5. STATISTICS and DATA of THE GREEK WIND M ARKET
• 6. STATISTICS and DATA of THE GREEK PV M ARKET
• 7. INVESTING IN RENEWABLES: THE CASE FOR AIOLOS

PRESENT PERSPECTIVES

• 8. CONCL

USIONS

• 9. ANNEXES A B & C

The HWEA Wind Energy Statistics take into account the wind capacity which is in commercial or test

• peration in Greece and it is based on sources from the market actors.

0,8 1,1 1,5 3,9 19,4 26,0 26,6 27,3 38,8 106,8 244,6 276,6 292,8 408,6 480,7 603,1 749,5 850,1 996,6 1155,2 1323,2 1636,6 1751,0 1865,9 1979,0 2081,5 1987 1989 1990 1991 1992 1993 1994 1995 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total installed M W per year

HWEA Wind Energy Statistics h1 2015

Total installed M W per year

17,00 35,60 41,00 52,90 83,70 88,81 102,52 130,35 193,40 298,65 411,75 625,80 THESSALIA NORTHERN AEGEAN SEA CENTRAL M ACEDONIA WES TERN M ACEDONIA IONIAN ISLANDS SOUTHERN AEGEAN S EA ATTICA WESTERN GREECE CRETE EAS TERN MACEDONIA & THRACE PELOPONNESE CENTRAL (S TEREA) GREECE

Installed M W per region

Installed M W per region

HWEA Wind Energy Statistics h1 2015

60,0 10,2 10,2 11,9 14,3 15,3 16,1 17,0 19,8 21,0 22,1 24,7 26,9 29,2 29,9 38,9 42,0 43,6 48,6 59,8 60,4 82,1 199,0 200,5 250,7 358,0 369,6 OTHERS <10 AEROTECHNIKI WRE PLASTIKA CRETE M ELKA ENTEKA ENVITEC THEM ELI IKTINOS INTRAKAT J ASPER ENERGY BCI WP IWECO EREN GROUP ENERCON Invest RENINVEST BABCOCK & BROWN ACCIONA PROTERGIA EUNICE RF ENERGY PPC Renewables ANEM OS (ELLAKTOR) ENEL GREEN POWER IBERDROLA Rokas EDF TERNA Energy

Installed M W per wind energy producer

Installed M W per wind energy producer

HWEA Wind Energy Statistics h1 2015

• 50

50 100 150 200 250 300 350 1987 1989 1990 1991 1992 1993 1994 1995 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Installed M W per year per manufacturer

ACCIONA ENERCON GAMESA NEG Micon NORDEX SIEMENS VESTAS OTHERS

Installed M W per year per manufacturer

HWEA Wind Energy Statistics h1 2015

57,6 68,6 50 142,35

2011 : 318,55M W

46,75 17 52,05

2012 : 115,8M W

38,2 6,8 18 52,9

2013 : 115,9M W

30,9 18 64,2

S1 2015 Installed M W per manufacturer

(total new capacity: 102,9 M W)

ACCIONA ENERCON GAM ES A NORDEX VES TAS 30,9 18 64,2

2014 : 113,1M W

Installed M W per manufacturer H1 2015

HWEA Wind Energy Statistics h1 2015

47,2 114,2 178,9 196,2 506,2 1038,8 0,0 200,0 400,0 600,0 800,0 1000,0 1200,0

• NORDEX

GAM ES A SIEMENS ENERCON VES TAS

Installed M W per manufacturer

2,3% 5,5% 8,6% 9,4% 24,3% 49,9%

M arket share per manufacturer

• NORDEX

GAMESA SIEMENS ENERCON VESTAS

Total M arket share per manufacturer

HWEA Wind Energy Statistics h1 2015

Greenpeace (2009)

WIND

PV (Helapco 2013)

1.5 bEuro investments in 2013 4.5 bEuro investments the last 5 years 20.000 direct and 30.000 indirect employment 38.000 households and 13.500 SMSs beneficiaries

J

• b creation

JOBS CREATED IN THE WIND SECTOR

CONTENTS

• 1. INTRODUCTION
• 2. THE DRIVERS
• 3. THE EU DIRECTIVE / TARGETS
• 4. THE IM PLICATIONS for GREECE
• 5. STATISTICS and DATA of THE GREEK WIND M ARKET
• 6. STATISTICS and DATA of THE GREEK PV M ARKET
• 7. INVESTING IN RENEWABLES: THE CASE FOR AIOLOS

PRESENT PERSPECTIVES

• 8. CONCL

USIONS

• 9. ANNEXES A, B & C

HELAPCO PV Statistics 2014

Interconnected system 2014 installations Total installations end 2014 Greek PV market

Annual installations Cumulative installations

Installed capacity by category

Installed capacity by category HELAPCO PV Statistics 2014

Total Installed capacity end 2014

Interconnected system Non interconnected islands HELAPCO PV Statistics 2014

Installed capacity by mounting category Installed capacity by voltage connection category

Roof tops Ground installations Low voltage M edium voltage High voltage

HELAPCO PV Statistics 2014

PV energy production 2014

PV efficiency of energy production 2014 (kWh/ kWp-year PV parks House roof tops Average

Interconnected system Non Interconnected system National average

Interconnected system Non interconnected islands

HELAPCO PV Statistics 2014

PV and job creation

J

• bs

Direct Indirect

PV and job creation

HELAPCO PV Statistics 2014

Average tariffs before and after the 2014 ‘New Deal” (€/ M Wh)

Before After Total nationally Households roof tops PV Parks non interconnected islands

PV Parks in the interconnected system

Total nationally Households roof tops PV Parks non interconnected islands PV Parks in the interconnected system

Average tariffs percentage reduction after the 2014 ‘New Deal” HELAPCO PV Statistics 2014

CONTENTS

• 1. INTRODUCTION
• 2. THE DRIVERS
• 3. THE EU DIRECTIVE / TARGETS
• 4. THE IM PLICATIONS for GREECE
• 5. STATISTICS and DATA of THE GREEK WIND M ARKET
• 6. STATISTICS and DATA of THE GREEK PV M ARKET
• 7. INVESTING IN RENEWABLES: THE CASE FOR AIOLOS

PRESENT PERSPECTIVES

• 8. CONCL

USIONS

• 9. ANNEXES A, B & C

Despite the severity of the financial crisis, which had a profound impact on investment in the

country, the penetration of renewable energy sources accelerated during the years of

economic contraction.

RES attracted over EUR 7.6 billion of investment in Greece cumulatively over the period

2006-2013. Despite the crisis, investment in RES accelerated between 2008 and 2012

During 2010-2013, approximately EUR 6.3 billion were invested in renewable energy

technologies in Greece, almost five times as high compared with the investments made during 2006-2009.

Wind energy, in particular, experienced an investment boom in 2011, at a time when the

sovereign bond spreads were considerably higher than today. Investment in wind fell in the second half of 2012 and has returned to half-on-half growth since then.

The economic crisis and its effect on RES development

RES grew at an average rate of 28% p.a. between 2006 and 2013.

Wind growth between 2006 and 2013.

The main reason of lower investment in wind in 2012 and 2013, compared with 2011,

is to be the boom experienced in photovoltaic technology during these two years.

In practice, there is a significant overlap between wind and PV investors, as part of a

strategy of building a portfolio of renewable energy installations.

PV & Wind absorbed the largest share (93% of total over the period 2006-2013 with EUR

5.4 billion for PV and EUR 1.7 billion for Wind). Thus installed capacity in RES grew at an average rate of 28% p.a. between 2006 and 2013.

The higher return observed for PV in the past two years, driven by the sharp fall in PV panel

prices, as well as the prospect of lower PV feed-in tariffs in the future, were the main reasons

for the switch from wind to PV.

The economic crisis and its effect on RES development

The boom experienced in photovoltaic technology

The FIT system is funded through a special account, administered by the market operator

(LAGIE S.A.). The account receives payments from consumers and in principle corresponds to the market defined cost of the energy produced with RES.

The S

ystem Marginal Price (SMP) was used until recently as a proxy estimate for the market

defined cost of RES. However, since mid 2013, in an effort to minimize the market distortions,

the suppliers pay at least the weighted average variable unit cost of thermal electricity (L.4152/ 2013.

When FIT exceeds the market defined cost of RES, the difference is covered, by charging

consumers with a fee on top of the retail tariff.

However, the rapid penetration of PV and the delay in adopting measures to tackle market

distortions, have led to a deficit in the account.

Indicative for the impact of the PV boom on the RES account deficit is that in 2013 the net

payment for PV energy took up 70% of the total outflows of the account (EUR 1.1 billion out of

EUR 1.6 billion) at an average of EUR 279/ M Wh for ground PV systems and EUR 515/ M Wh for

roof-top PVs.

In comparison, wind energy received 21% of the account’s net payments (EUR 347 million), at

an average price of EUR 84/ M Wh.

The DEFICIT

Cumulative DEFICIT of RES account

Tackling the deficit

Measures were introduced in late 2012 to tackle this deficit:

a levy on the pre-tax sales of electricity, produced with RES (L. 4093/ 2012). The “solidarity

tax” for PV ranged 25%-42%, depending on the start date of the operation of installations, while for wind and other RES was set to 10%.

an increase in the Special Levy paid by the consumers from EUR 5.43/ M Wh to EUR

14.96/ M Wh on average.

in April 2013 the amount paid to the account by the suppliers increased from EUR

32.80/ M Wh, being the average S

ystem Marginal Price at that month, to EUR 63/ M Wh (L4152/ 2013).

the levy was formalized by L. 4254/ 2014, where FIT for new wind parks for installed capacity

above 5 MW is 82 EUR/ M Wh (85 EUR/ MWh below 5 MW) and 90 EUR/ M Wh in the non-

interconnected islands and 105 EUR/ M Wh and 110 EUR/ M Wh respectively if no capital grant

was received. T

• compensate for the loss of revenue, the PPA’s were extended by 7 years for

power stations that were in operation for less than 12 years by 1.1.2014.

The FIT were also adjusted for existing wind parks, at 84-107 EUR/ M Wh, depending on size,

location and connection date. In addition, the FIT remains fixed for the duration of the PP A,

without adjustment for inflation.

Tackling the DEFICIT

Fit adjustment

Effectiveness of measures According to LAGIE (market operator) estimates

by the end of 2014 the deficit will be educed to 166,14 m EUR It will show a surplus in 2015 expecting to be around 48,92 m EUR by end of 2015. And for J

une of 2016, LAGIE estimates a surplus of 100,40 m EUR .

Effectiveness of measures

HELAPCO PV Statistics 2014 Progress of Special RES account

Source: LAGHE M ILLION €

Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15

CONTENTS

• 1. INTRODUCTION
• 2. THE DRIVERS
• 3. THE EU DIRECTIVE / TARGETS
• 4. THE IM PLICATIONS for GREECE
• 5. STATISTICS and DATA of THE GREEK WIND M ARKET
• 6. STATISTICS and DATA of THE GREEK PV M ARKET
• 7. INVESTING IN RENEWABLES: THE CASE FOR AIOLOS

PRESENT PERSPECTIVES

• 8. CONCL

USIONS

• 9. ANNEXES A, B & C

1.524+5.659+514+1.007 = 8.704 M W of mature wind projects

12.900 M W of mature RES projects Licensing Progress of RES up to 31.06.2014

Technology Applications

Production license Installation License Binding connection terms With connection contract with PPA Operating Wind

24.102 23.150 1.524 5.659 514 1007 1.866

Biomass

50 474 34 89 33 34,5 47

Geothermal

20 8

Small Hydro

115 964 41 76 15 23,5 220

PV(inl. Rooftops & PL exceptions)

100 4.422 488 1.554 567 1.008 2.588

CSP

316 471 38 212

Hybrid

920 295 2,5

TOTAL

25.622 29.784 2.124 7.592 1.128,6 2.073,8 4.721,2

488 +1.554+567+ 1.008 = 3.617 M W of mature p/ v projects

Wind energy producers sign 20-year contracts to sell their production at a fixed

price, called “feed-in tariff”, per M Wh. Wind and small hydro systems, enjoy the lowest feed-in tariff, which given the steady flow of new investment reflects the commercial maturity of this particular technology.

The feed-in tariffs for wind is almost 20% higher in case the investment is carried

• ut without public grants.

If the project covers the cost of interconnecting an autonomous island to

mainland, the FIT is increased by up to 25%, depending on the length of the connection and the capacity of the Wind park.

Investment drivers for wind energy (I) - Wind feed-in tariffs

Another major revenue factor is the availability of wind energy, which varies

significantly across regions. A common indicator for wind energy availability is the capacity factor, which measures the actual energy production as percentage of the maximum production, given the capacity of an installation. In particular, the annual capacity factor is estimated dividing the annual production with the product of the average installed capacity for that particular year and the hours in a year (8760).

In 2012 the average capacity factor of wind parks is estimated at 26%, while,

despite the increasing productivity of new wind turbines, it is expected to fall in the future, due to the increasing utilisation of areas with lower wind regime.

This parameter can vary significantly across sites. The quality of the wind

measurements campaign and the use of long term wind data are important for the mitigation of the associated risk.

Investment drivers (II) - Capacity factor

The most significant investment driver on the expenditure side is the initial investment cost. The installation cost for wind parks in Greece is considerably lower, compared with

• ther renewable energy technologies. The cost has followed the rapid fall in WTG’s

prices of the last year.

EUR 1,200/ kW in the interconnected system EUR 1,400/ kW in autonomous islands.

In comparison

hydroelectric systems, at EUR 2,000/ kW, solar thermal EUR 3,800-4,800/ kW geothermal installation EUR 5,000/ kW

M ore than three quarters of the wind installation cost correspond to the price of the wind turbine itself

grid connection (8.9%), foundation (6.5%) land rent (3.9%), Investment drivers (III) - Investment cost

Installation cost of wind and other RES

Wind turbine prices

Labour cost

Annual O&M cost per technology

Investment drivers (IV) - Infrastructure

The electricity grid is a serious constraint on wind energy development everywhere. Areas

with high wind potential, such as Peloponnese and Evia, are characterised as congested and the installed renewable energy facilities, together with the binding grid connection offers, cover the current grid availability.

The Aegean islands, with the strongest wind potential, are not connected to the mainland

electricity grid. The autonomous oil stations of the islands, with strong seasonality of demand and peak during the tourist season, have limited capacity to absorb stochastic electricity generation and use expensive oil.

The full harnessing of the wind energy potential requires the island interconnection, including

Crete with the mainland system and the completion of mainland grid extension works.

The system operator has a long term plan for the development of the electricity network,

which takes into account the need to strengthen the network to facilitate additions of wind capacity.

Investment drivers (IV) - Infrastructure

Investment drivers (V) - Access to finance

The economic crisis affected the availability of capital in the Greek banking system and the

shaken confidence in the Greek banking system meant that market capitalisation contracted.

Most capacity additions in Greece during this period were made by renewable energy

sources, and mainly PV and Wind, because the return on these investments was strong and

the risk low enough to offset the overall unfavourable credit conditions.

Projects of big international investors in the Greek renewables market have enjoyed access to

finance from foreign banks and financial institutions during the crisis period. The penetration

• f PVs was further supported strongly by export credit agencies of foreign manufacturers and

mostly of China, being by far the biggest PV manufacturer worldwide.

Investment drivers (V) - Access to finance

Investment drivers (VI) - Country (investment) risk

The inability of the Greek state to service its debt without institutional, over the past

few years, apparently has not significantly affected RES investments, given their boom during the crisis.

This is reasonable since the income of RES investments is not directly connected with the

ability of the state to serve its debt obligations.

Meanwhile, the country risk that comes with the doubt over debt service capabilities has

subsided substantially, as evident by the significant reduction of the spreads since mid 2012,

from 2 652 basis points for 10-year maturity bonds in June 2012 to 686 basis points in December 2013.

The downward trend continued further in the first quarter of 2014, with the spread falling to

approx, 490 b.ps. In M arch (year-on-year reduction by 88%).

Investment drivers (VI) - Country (investment) risk

Investment drivers (VII) - Financial risks

Wind investments, like any long term investment, are relatively less sensitive to such risks.

Fluctuation of interest rates or the value of the collateral can influence the terms of the loans, but banks’ recapitalisation is nearing completion, while large wind projects access finance from foreign banks and the risk is less.

Problems with grid connection and the licensing process could lead to delays, increasing the

initial cost. This risk can be mitigated with proper budgeting and planning.

Problematic integration of wind power, due to energy “spillage”, i.e. generation cut-off from

the grid due to inability to absorb the full scale of production, reduces the revenues of a

project.

However, compensation for such curtailments is foreseen by the law. Furthermore, the current

penetration levels are still too low to create such a problem.

Investment drivers (VII) - Financial risks

Investment drivers (VIII) - Regulatory risk

This risk is mainly related to the current deficit in the account, set up to fund the RES feed-in

tariffs, driven mostly by the rapid penetration of PVs, presented earlier.

In addition to the measures presented and aiming not to put the burden entirely on final

consumers, the account has been drawing revenues from additional sources, such as auctioning

• f EU ETS allowances, TV license fees and a lignite tax.

The above measures have had a considerable effect on the deficit of the renewable energy

account, with the deficit at around EUR 500m during the second half of 2013 and on a path to a swift, sustainable and permanent resolution. In particular, by the end July 2014 the deficit has contracted to EUR 192m.

Meanwhile, with these measures, according to the most recent calculations of the market

• perator LAGIE, the cumulative deficit of the RES account is projected to narrow to EUR 166m

by the end of 2014, and in fact turn into a surplus of approximately EUR 50m in the following year.

Investment drivers (III) - Investment cost

CONTENTS

• 1. INTRODUCTION
• 2. THE DRIVERS
• 3. THE EU DIRECTIVE / TARGETS
• 4. THE IM PLICATIONS for GREECE
• 5. STATISTICS and DATA of THE GREEK WIND M ARKET
• 6. STATISTICS and DATA of THE GREEK PV M ARKET
• 7. INVESTING IN RENEWABLES: THE CASE FOR AIOLOS

PRESENT PERSPECTIVES

• 8. CONCL

USIONS

• 9. ANNEXES A, B & C

Conclusions

• Greece is rich in RES, in particular Wind and Solar (but also hydro, geothermal and biomass)
• RES exploitation addresses positively all major energy policy drivers (European and national),

security of supply, competitiveness and combats effectively climate change

• During the years of economic crisis in Greece, RES deployment was one of the very few

sectors where investments were made and employment was created

• There have been side effects, though, due to the difficulties in controlling the penetration

rate of PVs in the electrical system. This was not only a Greek problem and it should not be used as a show stopper for future RES deployment

• Greece has not exploited yet all the opportunities associated to RES deployment, especially

those related to technology development, innovation and smart specialization

• The country is endowed with an abundance of all renewable energy sources, while it has

personnel with knowhow and experience to provide the platform for the much awaited take off of renewable energy development.

Conclusions

• Dr. Ioannis Tsipouridis

C.E.O. RED Pro Consultants The real question is not whether to invest or not in Renewables. The real question is how quickly can one invest, in order to be a leader. Thank you for your attention.