RES in Greece : new rules for boosting investments
1. The general context
Recently the government in Greece announced an ambitious plan to close down all lignite-fired electricity production units by the end of year 2028, thus fully endorsing the EU targets for decarbonization and green energy. The implementation of this goal along with the introduction of the EU Target Model by end of June 2020 will change drastically the role of RES in the overall energy landscape of the country. Ultimately, by end of year 2028, RES penetration should reach approximately 60% in the country’s energy mixture. In the meantime the use of natural gas as transitional fuel is expected to grow significantly.
The legal regime in Greece constantly adjusts to follow these fundamental developments. Since 2016 and the adoption of Law 4414/2016 the country has a new legal framework for RES state aid. Market incentives are offered resulting to large RES production units being introduced into the new electricity markets, now operated by the Energy Exchange (EnEX). The previous regime of Feed-in-Tariffs (FiT) is gradually replaced by a Feed-in-Premium (FiP) regime, deemed less distortive of fair competition and reference prices are from 2017 onwards determined mainly by competitive tenders (auctions) organized by the Regulatory Authority for Energy (RAE). All these legislative measures have been approved by the European Commission under EU State Aid rules, which is important for assuring not only stricto sensu legal certainty but more generally a predictable business legal environment for prospective investors
2. Objectives and features of the draft law
Ensuring a level playing field in determining prices for RES projects is, however, not a panacea for attracting investments. Beyond clear rules for determining the remuneration of new RES projects, it is necessary to provide a friendly regulatory environment for implementing such investments. Therefore, the government is about to submit to the Parliament in the immediate future (although some delay may be expected due to the global coronavirus crisis) a comprehensive draft law that aims to deal globally with administrative inefficiencies of the currently applicable rules in licensing RES projects. The draft law was open to a fast track public consultation process that was concluded on 18th March 2020.
The main objectives of the draft law are:
- Simplification of administrative/bureaucratic procedures, by (a) providing for shorter deadlines for authorities to act, (b) reducing of licensing stages (by merging previously distinct stages), (c) the replacement of production licenses by – easier to issue – Producer Certificates (actual application of these provisions will require the previous issuance of a producer certificates regulation, similar to the existing licenses regulation), (d) the establishment of an electronic registry through which petitions will be filed and processed.
- Introduction of novelties aiming at reducing administrative involvement and delays, such as the use of Certified Private Evaluators in the process of environmental licensing and the increase of the duration of ETAs.
- Simplification of the production license retention fee regime and 50% discount upon already imposed fees for the period 2017-2019.
B. Environmental licensing
As per environmental licensing the draft law’s main features are the following:
- Establishing a deadline for the issuance of Environmental Terms Approvals (ETAs) of one hundred and twenty (120) days.
- The environmental licensing stages are limited to three (3) instead of current six (6) or seven (7), depending on the category of the work/project.
- Introduction of Certified Private Evaluators in the process of environmental licensing.
- Initial duration of ETA for fifteen (15) years and not ten (10) years as currently provided.
- Simplification of the process of amending or renewing environmental terms and provision of extension of the duration of the ETA for projects or activities complying with European standards (EMAS or ISO).
With respect to regulatory and other licensing matters, the draft law’s main features are the following :
- The previously applicable Production License issued by RAE shall be replaced by the Producer Certificate which shall be issued by an act of the President of RAE online through the Electronic Registry and shall be published on RAE’s website
- The Producer Certificate shall be issued no later than twenty (20) days after the deadline allowed for objections, provided that no objection has been raised against the project, or within twenty (20) days after the lapse of the deadline for the applicant (investor) to submit its views on objections
- Within six (6) months of the issuance of the Producer Certificate (in the case of Natura areas, within twelve (12) months), the investor must have submitted an application for an Environmental Terms Approval Decision, otherwise the Producer Certificate is invalidated.
- Within thirty six (36) months of the issuance of the Producer Certificate, the investor should have accepted the Final Connection Offer for the project and should have submitted a relevant bank guarantee (in cases where this submission is required), otherwise the Producer Certificate is invalidated
- The one-off Producer Certificate application fee shall be EUR 60 per MW, with a maximum of EUR 12.000,00 €.
- The fee for the right to own production license in force until now (Production License Retention Fee) is abolished retrospectively from 1 January 2020 and is replaced by a one-off Producer Certificate Issuance sliding fee:
- for projects of up to 1 MW capacity the charge is 3.000,00 EUR / MW;
- for projects of 1 to 10 MW capacity is set at 2.500,00 EUR / MW;
- for projects of 10 to 50 MW capacity is 2.000,00 EUR / MW;
- for projects of 50 to 100 MW capacity is 1.500,00 EUR / MW.
- Applications for the issuance of Producer Certificates shall be allowed during specific time slots per year (“filing rounds”) every four (4) months (in February, June and October).
- The Producer Certificate for wind, solar and small hydroelectricity projects, shall be issued within forty (40) days at the latest.
- Simplified procedure for amending the Producer Certificate, in case of minor changes in the project characteristics. If these changes do not affect the project's capacity by more than 10%, compared to the original Producer Certificate, or do not relate to major changes in the equity structure of the investment scheme, the Producer Certificate is amended at any time by submitting an online application to the Registry.
- A new RES and Special Projects Regulation of Electricity Producer Certificates shall be issued, replacing the currently applicable RES Licences Regulation.
3. Transitional provisions
The draft law contains some provisions aiming at assuring the smooth transition to the new regime. Thus, the draft law contains provisions to bridge the gap between the current and the new regime, applicable to: (i) already issued Production Licenses; and (ii) pending applications for Production Licenses filed under the existing regime. The key provisions in this respect can be summarized as follows:
- As per article 24 of the draft law, all pending applications for Production Licenses submitted from September 2018 onwards shall fall under the licensing regime of the new law; procedural details are to be determined by the new RES Producer Certificates Regulation to be issued by RAE. Applications will be reviewed and prioritized as per the time of their filing;
- As per article 25 of the draft law, for Production Licenses already issued, the deadlines for the issuance of the respective ETA and the acceptance of the Final Binding Grid Connection Offer, start running from 1.6.2020, while for Production Licenses that shall be issued from 1.6.2020 and onwards, the aforementioned deadlines start running from the issuance of the Production License.
Some improvements of the transitional provisions concerning transfer of existing production licenses and overlapping project sites could be envisaged in order to better protect the legitimate expectations of the current RES projects ‘owners.
4. Coronavirus effect – extraordinary legislative measures
Countries around the world are imposing severe restrictions on their populations in a bid to stop the spread of coronavirus.
Greece is in total lockdown after the government decided to impose a series of strict measures to halt the spread of the coronavirus across the country, closing all shops, exempting only essential shops, such as supermarkets and pharmacies.
In an attempt to facilitate the operation of energy businesses, the government provided (GG A’75) that companies engaged in the field of production, transport, supply and disposal of liquid and gaseous fuels, as well as production, distribution, transportation and supply of electricity and gas can supply materials and spare parts, which are necessary for their continuous operation, by way of derogation from the exceptional restrictive measures, by businesses or commercial stores which fall under the current restrictive provisions on suspension.
Furthermore, in the same context, government provided, among others that: i) the duration of the installation licenses and the final binding Grid connection offers of RES projects, which expire by June 30, 2020 and the deadlines for trial operation of RES projects selected through a competitive tender (auction), with obligation for operation until June 30, 2020, are extended by six months, ii) the duration of the installation licenses and the final binding connection offers of RES projects, which expire between July 1 and December 31 2020 and the deadlines for trial operation of RES projects selected through a competitive tender (auction), with obligation for operation between July 1 and December 31 2020, and iii) the implementation of the new definition/amendment of reference prices on the compensation of RES projects (please see below part V) are extended by four months.
5. Change of Reference Prices on the compensation of small RES projects
The Ministry of Environment and Energy by its recent decision (GG Β’1045/2020) determines and amends the reference prices on the compensation of small RES projects.
Firstly the Decision defines the reference prices for small wind projects up to 60 kW and house solar projects up to 6 kW.
Further, the Decision provides for a fixed tariff of 63 €/MW for solar projects of up to 500 kW, which will connect to the Grid from 1.5.2021 and onwards. Finally, Reference Prices are also amended for a number of other categories of projects, such as biogas and biomass
6. Conclusion – perspectives
In our opinion the draft law moves to the right direction. The simplification and acceleration of environmental, regulatory and other licensing issues, along with the implementation of the Target Model and the new regime of state aid of RES projects can significantly contribute in attracting large RES investments in the country. Hopefully, the parliamentary procedure for the adoption of the new law will succeed to fine tune the provisions of the draft law on the basis of the comments expressed during the public consultation. Once enacted to law, the draft will have to be completed and implemented by means of the RES and Special Projects Regulation of Electricity Producer Certificates, which is expected to be adopted promptly.
For more information please contact:
- Alexandros Tsirigos - Executive Partner, KLC Law Firm
- Dr. Vassilis Karagiannis - Partner, KLC Law Firm