ECONOMY

Government sees fast progress in development of renewable energy sources, but Greece still lagging in EU

Greece remains the only one of the first 15 European Union member states with an effective power market monopoly, the Public Power Corporation (PPC), a report by the business consultants Grant Thornton shows. The report, on the progress of power deregulation in the EU, says the monopoly exists despite legal liberalization of the market in 1999, which has allowed licensing of private producers for a capacity of 3,635 megawatts and of another eight firms to supply 2,000MW. The report comes only two weeks after the government’s unveiling of a framework for the activation of private producers and suppliers on a daily-operated market basis. It also notes that the country’s interconnection links with foreign grids are of limited capacity (totaling 1,100MW) and do not favor promoting competition through imports. Furthermore, the report argues that private investors have been discouraged by the dominant market position of PPC and inadequate legislation. To be sure, Greece is not the only EU member found to be lagging in power deregulation. About 94 percent of French electricity is produced by the state-controlled Electricite de France (EDF) and choices for clients is extremely limited, Grant Thornton notes. In contrast, the power markets of Germany, Belgium, Spain and Italy have a satisfactory degree of competition. The report also finds Greece lagging in the development of wind parks, which grew rapidly here after 1998 with a 326 percent growth in the 1999-2004 period. Nevertheless, Greece is still far behind the EU target of 20.1 percent of total power to be produced from reusable energy sources (RES) by 2010. Despite licensed production capacity totaling more than 3,500MW, the actual installed capacity to date is only 465MW. The Grant Thornton study attributes this to time-consuming procedures required for the issuing of operating licenses, made even more difficult by inadequate staffing of public departments and the lack of a national land register. The average time required for the issuing of an operating license is more than two years. A new framework currently being prepared is expected to improve incentives. Deputy Development Minister Giorgos Salagoudis told Parliament yesterday that in the last 12 months 80 million euros had been invested in RES, and the government issued 25 percent of all production and operating licenses in force. He noted that a May 2004 EU report ranked Greece in last place in RES penetration in power production. Germany is the world’s biggest wind power producer, with total installed capacity of 16,629MW. But actual production last year was about half that, accounting for about one-third of the world’s total production and 50 percent of the EU’s total. It also represents 5 percent of the country’s electric power. Greece will host the European Wind Power Conference in 2006.