Greece imposes charge on coal-generated power

Greece will impose a charge on coal-generated electricity and cut the guaranteed tariffs it pays to renewable energy producers as part of a general energy pricing overhaul, the government said on Wednesday.

State-controlled utility PPC will pay a charge of 2 euros for each megawatt it produces from burning lignite, a form of brown coal that produces almost half of Greece’s power needs, the energy ministry said in a statement.

It was not immediately clear if PPC will be allowed to pass on this charge to consumers. The company’s new, regulated power prices are expected to be announced by the end of the year.

The lignite charge, which will apply for a year from Jan. 1, will generate around 55 million euros ($72.10 million) and help fund a special account out of which renewable energy producers are paid and which has a deficit of about 200 million euros, according to ministry estimates.

Distorted energy pricing has been criticized by Greece’s international lenders and is a stumbling block in efforts to make its economy more competitive, cut dependency on lignite and boost renewables energy production.

Wind and solar power cover just seven percent of Greece’s total power requirements, against 46 percent for lignite and 8 percent for oil. Renewables capacity, mostly wind, has jumped to about 2 gigawatts this year from a mere 430 megawatts in 2004.

In a separate move to boost the account’s coffers, the regulator decided on Tuesday to increase a «special renewables charge,» collected through electricity bills, to an average 5.43 euros per megawatt hour from 1.8 euros.

In 2012, the account will receive part of funds currently earmarked for state broadcaster ERT as well as proceeds from the sale of about 10 million tons of carbon emission rights, the ministry said. Greece has raised about 110 million euros from carbon rights sales this year.

On the other hand, Greece will cut guaranteed feed-in tariffs for green energy producers. The move reflects «lower installation costs and more efficient technologies,» the ministry said without elaborating.

Industry sources said they expected the reduction to apply primarily to subsidies for solar energy, not wind. The cut will not apply retroactively, the ministry said. [Reuters]

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