1. RES as a Growth Tool By George Kofinakos
Country Advisor > StormHarbour UK
CEO > Enolia Premium Capital Luxemburg
Vice Chairman > Enolia Energy
RES as a Growth Tool

2. Contents RES Globally RES in Greece Growth Barriers in Greece
Overview of Policy Instruments for RES
Action Plan & De-Risking
Conclusion
Contents

3. RES Globally

4. Industrialised Nations Average
June 17, 2000
Today’s atmospheric CO2 concentrations are higher than they have been for at least 900,000 years
Climate change is one of the greatest environmental, social and economic challenges the planet is facing
Global warming is evident from increases in global average air and ocean temperatures, widespread melting of snow and ice and rising global mean sea level
Concentration of CO2 in the atmosphere has increased by 30% from pre-industrial levels
Concentration in 2008: 385 ppm
Global CO2 emissions map
World Average
Source: World Resources Institute.; DB research
No data
93.9 tonnes CO2e per capita
Industrialised Nations Average
Global Warming

5. The Fight Against Climate Change

6. Who is Responsible for Global Warming?

7. Why is an active RES Policy valid Globally?
This is a summary of some of the most important arguments for an active renewable energy promotion policy, valid for all countries, though to varying degrees:
The current level of renewable energy in most countries is even lower than would be economically efficient at today's market prices. As newcomers, renewable energy technologies (RET) face a series of market barriers
Many analysts are convinced that the long-term resource scarcity fossil energy faces is still not entirely priced-in. If current prices of fossil fuels reflected their scarcity correctly, RET would become more competitive
The prices of fossil fuels are highly volatile due to short-term changes and incidences in the world's energy markets. Renewables are generally local energies and, as such, provide diversification of the energy mix with a security premium. It is widely agreed that renewables should have a higher share for energy security reasons in the energy portfolio, particularly in oil and gas importing countries
The use of fossil fuels is, to varying degrees, damaging to the human health and the local environment. The reduction of these impacts by technical means increases the cost of fossil fuel use. Negative environmental effects (externalities) must be internalized, i.e. reflected in the energy price. All this improves the competitive position of renewable energy technologies
Renewable energy technologies offer prospects for a dynamic industrial policy. In industrialized economies plagued by unemployment and reduced growth perspectives, as well as in some developing countries, RET have proven to be an option of developing industries with a future
The deployment of RET in rural areas in developing countries offers opportunities for the use of local natural resources, employment, and ultimately institutional capacity.
Why is an active RES Policy valid Globally?

8. Sources of Emission Free Electricity

9. Nuclear Power is expensive in the Long Run...

10. ….the Solution is Solar

11. Overview of Renewables in Europe
June 17, 2000
EU is developing a framework for the promotion of renewable energy sources for electricity generation; renewables are set to increase their contribution, reaching 20% of energy consumption by 2020
Such an ambitious target requires firm political support with regulation being the strongest tool towards meeting the objective
Each of the member-state governments has agreed to a target rate of renewable energy production and established feed-in tariffs or quota obligations as well as tradable certificates
A feed-in tariff is a regulated purchase price of electricity passed through to the consumer. Electricity utilities are obliged to buy renewable electricity through Power Purchase Agreements (PPAs) of 10 to 25 years
A Green Certificate is a tradable commodity proving that certain amount of electricity is generated from renewable sources and can be traded separately from the energy produced
Renewable energy > 30 %
Renewable energy > 20 %
Renewable energy > 10 %
Renewable energy > 5 %
Renewable energy < 5 %
Overview of Renewables in Europe

12. Sector Themes and Trends
June 17, 2000
Worldwide Energy Consumption
Demand for electricity is growing faster than total energy production, hence many countries are expected to run supply deficits over the next decade; the trend applies predominantly to developing countries where electricity consumption is growing at a higher rate.
Electricity generation in Greece, Turkey, Romania and Bulgaria is expected to increase by c.40% over the next 10 years (from 380 TWh in 2008 to c.530 TWh in 2018):
Such an increase will entail significant generation capacity to be added to the system; Renewable energy has strong political support and will contribute to this increase.
Worldwide Renewables Investment
Energy security, fossil fuel prices and environmental issues are the critical challenges for the global energy industry.
Europe has traditionally been on the forefront of renewables with notable success stories, including:
Germany
Denmark
Spain
Europe has policies in place and is committed to continue leading the sector.
Annual worldwide clean technology investment
is expected to reach $450bn by 2012 and $600bn by 2020
Sector Themes and Trends

14. RES in Greece

15. The Five Pillars of Greek Economy
Tourism
Shipping
Real Estate
Agriculture
Energy
The Five Pillars of Greek Economy

16. Global and Local Energy Mix
Global Energy Mix
Greece’s Energy Mix
Nuclear
13%
Clean & Renew-able
23%
Natural Gas
17%
Coal
Uncate-gorized
Lignite & Solid Fuel
53.7%
Clean & Renew-able
18.5%
Natural Gas
17%
Crude Oil
Other
27%
10.6%
20%
0.2%
Global and Local Energy Mix

17. The Greek Electricity Chain
RES
Producers
HTSO
Hellenic Transmission System Operator
Retail
Electric
Companies
Consumers
The Greek Electricity Chain

18. Licencing Procedure for RES Projects
Investor
RAE
(Techno-economic evaluation/
Compatibility with the
National RES framework/
Capacity Availability)
Applications are submitted in the 1st 10 days of even months
HTSO (1)
Preliminary Connection Terms
Forest Department
Application for final Connection terms
HTSO (2)
Application for Installation License
Relevant Authorities
Central Level
MEECC
Regional Level
Regional DDP
Application for intervention in forest area
Installation
License
issued by or
Regional
General
Secretary
Final
Connection
Terms
SEA / DRP
Submit EIA Study
ETA
Intervention approval
Protocol
&
Building
Permit
Production License
Authorities
& County Council
MAA : Ministry of Agricultural Affairs
SEA : Special Environmental Authority
MEECC : Ministry of Environment, Energy and Climate Change
RAE : Regulatory Authority of Energy
HTSO : Hellenic Transmission System Operator
DDP : Direction of Development and Planning
DRP : Direction of Regional Planning
EIA : Environmental Impact Assessment
ETA : Environmental Terms Approval
MEECC Notification
Licencing Procedure for RES Projects

19. RES Licence Evolution in Greece
Technology
Power (MW)
Application
for
Production Licence
With
Production
Licence
Connection
Terms
Installation
Signed
PPA
In Operation
Wind MW
655.83
Biomass
401.83
62.55
24.40
4.50
44.53
Geothermal
340.50 8
0.00
Small Hydro
949.02
142.49
66.75
25.70
205.63 PV
370.56
460.38
CSP
379.60
9.20
Hybrid
446.62
0.08
Total
(as of September 2011)
RES Licence Evolution in Greece

20. Installed RES Capacity in Greece

21. Growth Barriers in Greece

22. Quick assessment of the Greek Energy market
The assessment of the current state of Greece's energy sector is rather devastating ("high energy consumption, low fuel efficiency, low labor and capital productivity and an expensive energy mix characterize the Greek energy sector"). Consequently, the sector should be turned around to offer significant potential. Action should be taken in the form of the following steps:
Improving energy efficiency - streamline energy consumption mainly in buildings and transportation (adjustment and increased specificity of relevant standards; effective incentive schemes; parametric and progressive electricity pricing)
Boosting productivity - revisit regulatory framework; consider 'price and cap' system; fuel efficiency of plants; labour and capital productivity
Optimizing energy mix - develop National Energy Strategy
Increasing 'extroversion' and sector impact - leverage up on geographical position of Greece (hub for gas?); involvement of Greek players in regional infrastructure and power generation projects
Quick assessment of the Greek Energy market

23. Growth barriers in Greece: the Usual Suspects
Investments in scale discouraged
fragmentation and small scale of business across sectors - over regulation of markets and professions - complex and restrictive licensing and operating processes - lack of integrated and systemic zoning and real estate planning - highly complex and volatile tax framework
Large and inefficient public sector
large, expensive public sector with low quality outputs - lack of mechanism to inject market - sourced management and technical talent
Rigid and narrow use of human resources
low rates in youth and female employment - binding and inflexible collective agreements - disconnection between market and education
Cumbersome legal and judicial system
overabundance of laws sometimes conflicting - heavy administrative burden in courts, resulting to long lead times
Widespread informality
extensive tax evasion - substantial wealth from the black economy
Growth barriers in Greece: the Usual Suspects

24. Overview of Policy Instruments for RES
Regulatory Policies
Incentives
Fiscal
Public Financing

25. Focus on cost reductions and improvement of the relative competitiveness of RE Technologies in given markets
capital grants - third-party finance - investment tax credits - property tax exemptions - production tax credits - sales tax rebates - exercise tax exemptions
Capital subsidy, grant or rebate
one-time payments by the government to cover a percentage of the capital cost of an investment
Tax incentives
Energy production payment
direct payment from the government per unit of renewable energy produced
annual income tax credit based on the amount invested or the amount of electricity generated
reduction in taxes on the purchase (or production) of renewable energy technologies
investment tax credits
production tax credits
reductions in sales,
energy, carbon, excise, VAT
Fiscal Incentives

26. Public Financing Public Investment, Loans, Grants
Public Competitive Bidding
awards contracts for
construction
operation
fixed quantities of renewable capacity
assists funding distribution for
implementation
infrastructure development
Public Financing

27. Regulatory Policies Transportation Fuel Electricity Generation
Government mandates
Tradable RE Certificates
Utility Quota Obligation
Concessions
Obligation & Mandate
Feed-in Tarrif
Net Metering
Market share-ensuring regulatory policies
Price-guaranteeing regulatory policies
Institutional Development
Regulatory Policies

28. Action Plan & De-Risking

29. Corrective Action Plan (I)
Launch awareness campaigns on energy efficiency benefits, costs of buildings and transportation
Create a Stock-Exchange RIC for RES or establish a Local Fund specialized in RES with Government Guarantees
Exploit Renewable Energy Hubs all over Greece with existent licenses and supportive framework ready to be constructed by Investors
Revisit incentives for retrofits (e.g. tax rebates instead of subsidies)
Accelerate the implementation of financially viable island interconnections to reduce costs and emissions
Investigate the viability to locally manufacture renewable energy parts and equipment
Create Supportive Policy and Institutional Frameworks
Promote Private Sector Involvement
Level the Playing Field
Corrective Action Plan (I)

30. Corrective Action Plan (II)
Nurture Micro-Enterprise
Build Projects Around Local Needs and Capacities
Use structural funds and framework programmes better
Increase use of funds from the European Investment Bank and other public finance institutions
Improve access to Risk Capital
Coordinate Community and National funding and other forms of support
Upgrade Smart Grid
Support Helios Project as a strategic investment
Interconnect Universities with RES business to provide technical resources
Prioritize high local renewable investors
Corrective Action Plan (II)

31. Most RES technologies have high risk and long-term return
Risk is a key parameter in explaining the difficulties of RES technology and projects when accessing capital due to the specific risk/return ratio for RES projects. To reduce financing risks, access to low-cost finance should be increased through an extended use of –sometime innovative- measures. The mitigated risk scenarios in these cases indicate that the annual consumer expenditures can be reduced by 50%.
Most RES technologies have high risk and long-term return
De-risking Renewable Energy

32. Indicative Risk Mitigation Mechanism

33. Reduction of cost of Capital
Reducing the cost of capital will result in lower consumer expenditures and an accelerated uptake of RES. The main approach is to reduce risk at all stages in the project lifecycle, via:
Ensuring a long-term commitment towards renewable energy
Removing deployment barriers
Sharing risk via improved financial instruments
e.g. government loan guarantees and/or project participation
Reduction of cost of Capital

34. Increasing public finance participation in projects (PPP)
The benefits of a pro-active and participating government are manifold and have a significant impact on the access to capital and its costs:
Government participation can provide a significant amount of capital
in either equity, (subordinated) debt, or mezzanine finance form
Cost of capital would be significantly reduced
by bringing down the regulatory risk
Project financing would be achieved more easily and at a lower cost
the percentage of project initiatives to be actually realized would increase - this would strengthen the confidence of the market
Windfall profits would be avoided or reduced
via government participation, part of these profits flow back to the treasury
Supporting policies could be developed
through the better insight obtained of the challenges and barriers the market is facing, the government could develop a policy e.g. for mobilizing the industry supply chain
A state-owned entity can be a safeguard for ensuring a stable renewable energy policy
Increasing public finance participation in projects (PPP)

35. Increase the Access to low-cost finance
Stability, transparency and coordination
The appropriateness of financial instruments is highly dependent on technology or the project’s development stage. Current perceptions indicate that access to finance can be enhanced by innovative public-private approaches for equity provision to technology developers, and on guarantee mechanisms for project developers
Multiplier effect
Some innovative instruments such as guarantees or mezzanine funds can have a significant multiplier effect as they contribute to cover technical and political risks (certainty for investors). From the perspective of debt and equity providers, there are no one-size-fits-all solutions, but rather a mix of instruments that will be appropriate to specific levels of maturity of technologies or projects, and to various country- specific contexts
Increase the Access to low-cost finance

36. Greece clearly has the potential (Solar, Wind, Water) of becoming the Saudi Arabia for Renewables in Europe. To achieve this goal, it only needs Political Commitment and a National Strategy
Conclusion

37. June 17, 2000
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