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Unfilled potential

Jannis Papadimitriou / cmkApril 29, 2014

Greece's renewable energy sector has enormous potential, but legal and administrative obstacles have tripped up investors. While some small enterprises have prospered, major investment is still lacking.

Solar panel farm in Greece
Image: picture-alliance/dpa

First, the good news: Since the outbreak of the debt crisis, Greece has been trying to strengthen incentives for the expansion of its renewable energies sector, in an effort to bring investors into the country.

Two years ago, the Socialist government of then Prime Minister George Papandreou guaranteed investors in green electricity up to 47 cents per kilowatt-hour, setting off a solar boom fueled by the Grecian sun. More than 90 percent of Greece's solar plants have been built in the past three years, and investors have also shown enthusiasm for wind, biomass and geothermal projects.

But since then, feed-in tariffs have been significantly reduced and disillusionment has set in, said Efthymios Mouratidis, an economist with a German-Swiss energy company that has invested in Greece.

"The country has ideal conditions for both the wind and the solar sector, unlike almost anywhere else in the world," said Mouratidis. "But the problem is the local administration, which tries to put as many obstacles in the way as possible."

The Greek government has been working on the modernization of the country's legal framework for years, in an attempt to promote renewable energies. Their efforts have met with success - at least on paper. It's the implementation that has been lacking, said Mouratidis.

"The legal framework is not as bad as it's often been portrayed. The problem is that individual government agencies are sloppy when it comes to the authorization process, or simply try to introduce delays."

Creativity meets bureaucracy

Nikos Psaras
Many thought Nikos Psaras, a geothermal pioneer in Greece, was crazy to invest in renewablesImage: DW/J. Papadimitriou

Despite these challenges, resourceful businessmen keep trying to find ways to tame the administrative jungle - entrepreneurs such as Nikos Psaras, the owner of a geothermal company based in Athens.

Psaras, 38, first learned of the potential to generate electricity using ground heat on a short stay in the US in the late 1990s. At the time he was working as a subcontractor for an international consulting firm. Since 2002, the chemical engineer has worked exclusively in the field of geothermal energy - and despite the odds, has found increasing success.

Initially, many thought him crazy to specialize in such a well-defined market segment, a practice that was unimaginable at the time. In addition, the legal framework for the use of geothermal energy didn't exist before 2004.

"Basically, we were operating illegally," said Psaras, who remembers it as a time full of difficulties and struggle. "Sometimes, we hid our gear in a military tent. Or we applied for a license for a different, legal activity in order to pursue our actual work relatively undisturbed. "

Psaras' efforts have apparently been worth it, with his firm now employing 13 in brand new, modern offices. The Greek market for geothermal energy has seen better days, but Psaras said there are still interesting opportunities in the tourism sector, especially with the EU's strong support for geothermal conversion projects.

"To give just one example: Recently, we retrofitted a small hotel that last year was paying a monthly bill of 5,000 euros (about $6,900) for electricity and 9,900 euros for natural gas. Today, the manager is saving around 6,600 euros a month. The initial investment was 180,000 euros, half of which was financed with EU funds," said Psaras.

Looking for major investments

While small businesses have been benefiting from Greece's renewable energy expansion, major investment has been marginal. Take, for example, the Helios project. In 2011, Athens announced its plans for "Europe's largest solar park," with a production capacity of 10 gigawatts by 2050. George Papaconstantinou, the environment minister at the time, promised that the project would bring annual revenues of up to 4 billion euros in future electricity exports.

Solar Panel farm on Crete
Greece offers almost ideal conditions for solar energyImage: picture alliance / ZB

For the moment, said Mouratidis, the project is on hold. "The program was very ambitious and was heavily touted by both Greece and, especially, Germany, but in the end it came to nothing," he criticized.

No official reason was given for the project's collapse. But according to the energy trade news portal Econews.gr, Helios was put on hold since potential donors - among them the EU and the European Investment Bank - showed too little interest.