Photovoltaics market is in for shock measures

The Environment and Energy Ministry is about to launch a package of measures that includes a significant reduction to the guaranteed prices for new photovoltaic projects, an extraordinary levy on operating solar systems and a tax on domestic panels.

The reason the ministry is taxing photovoltaics is it needs to streamline the renewable energy sources (RES) market, which is close to bankruptcy.

The measures are expected to deal a serious blow to the solar energy systems market and have already provoked a strong reaction. They will also come hand-in-hand with a small increase to the RES charge on electricity bills and with the application of measures that were adopted last December but were not fully enforced. Specifically, the receipt of part of the charge for state broadcaster ERT toward strengthening the fund of the Operator of Electricity Market (LAGIE) and the continuation of auctions of emission rights, with the addition of those for 2013.

The ministry is also exploring the possibility of suspending licensing for new photovoltaic projects, as provided by the law, given that the target for 2014 has already been covered. However, such a measure could bring a rise in the illegal trading of licenses and hamper major investments.

The package of measures has not been locked down yet as it would require a number institutional procedures, but it has been presented to representatives of Greece?s creditors in Athens. The eurozone and International Monetary Fund inspectors have, according to sources, linked the realization of the measures with the approval of a loan to LAGIE, amounting to 170 million euros, from the Loans and Deposits Fund.

The disbursement of that loan will offer immediate relief to the cash-strapped market. The deficit of LAGIE is close to 400 million euros, resulting in a debt of about 170 million euros to renewable energy producers.

Contacts between Deputy Energy Minister Asimakis Papageorgiou with market representatives ended on Monday and the ministry is now hoping that the measures it has planned will be put into force immediately in order to give a much-needed cash boost to the energy market.

However, the photovoltaics sector is in a state of shock as the measures are expected to reverse the once-favorable environment in the market. This is based on a guaranteed price that is 30 times higher than that in Germany, which has much fewer sunshine hours than Greece. This explains the great growth in the sector in Greece, which amounted to 61 percent year-on-year in 2011.

The sector asked for the intervention of the prime minister to avert measures that would affect existing investments and hamper development. Reaction focuses on the taxation of operating systems and on a considerable reduction in new contracts. Photovoltaic producers have also presented data showing that their sector is not responsible for the LAGIE deficit.