ECONOMY

Greece to raise clean energy taxes to erase deficit in industry

Greece, suffering its sixth year of a recession, will increase renewable-energy taxes next month as part of measures to eliminate the deficit created by subsidies to the industry, a European Union report shows.

Greece plans a tax of an average 7 percent on revenues from projects completed from June, according to the Second Economic Adjustment Program for Greece report. It will also extend a temporary tax on installations that was imposed last July, while gradually tripling a levy consumers pay to help fund subsidies.

The country is seeking to rein in growth in the industry after the introduction of feed-in tariffs, or above-market rates for clean-energy production, led to a boom in new projects. The difference between the rates and the prices charged to users has created a deficit that the government wants to erase next year.

The gap, which increased to 333.5 million euros ($429 million) at the end of 2012, is forecast to reach 825 million euros this year and double that a year later, the EU report shows, citing Energy Ministry data.

Faced with accelerating growth in renewable power since introducing the tariffs in 2009, Greece has already cut rates for solar, the fastest-growing technology, three times in the past year and imposed temporary taxes. Since last July, solar- plant owners have been taxed 25 percent to 30 percent of their revenue, while other clean-energy plants pay 10 percent.

The so-called solidarity tax will be prolonged by six months to December 2014, according to the report. The government will need to take further measures to ensure financial balance in the longer term because the levy can only be extended until July 2015.

Greek solar capacity doubled last year to reach about 1,546 megawatts, driven by the highest feed-in rates in the EU, Bloomberg New Energy Finance data show. Wind-power installations reached 1,749 megawatts by the end of 2012.

[Bloomberg]