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Recent reviews of the Greek feed-in tariff model

In 2012 the Greek parliament, under its loan commitments and in coordination with its European partners and the IMF, undertook the obligation to comprehensively review the existing feed-in tariff (FIT) structure and set out a number of alternatives by preparing a plan for the reform of the renewable energy sources support schemes to make them more compatible with market developments and to reduce the pressures on public finances

Gus J PapamichalopoulosDr Sotirios Douklias
In 2012 the Greek parliament, under its loan commitments and in coordination with its European partners and the IMF, undertook the obligation to comprehensively review the existing feed-in tariff (FIT) structure and set out a number of alternatives by preparing a plan for the reform of the renewable energy sources support schemes to make them more compatible with market developments and to reduce the pressures on public finances.

This plan must include options for the reform of the FIT support scheme, including the option of a feed-in premium model. The singling out of the feed-in premium model indicates the importance given to it, as it has gained momentum in recent years and has been adopted by an increasing number of countries.

In the plan for the reform of the renewable energy sources support scheme, the Ministry of Environment, Energy and Climate Change reviewed the feed-in premium option and concluded that, at least at the present time, it is not appropriate for the Greek market.

Additionally, it found that the present fixed FIT scheme, along with the predetermined semi-annual decrease of the photovoltaic FITs, have been successful in their goals, which include the increase of RES penetration and the responsiveness of the value of the FIT to the cost of renewable energy generation. The Ministry put forth several reasons, the first being that the current financial climate requires stability which does not exist in the feed-in premium models. It also felt that the feed-in premium model performs best in a market where energy storage and the scheduling of renewable energy production is possible. The wholesale electricity market lacks an overall long-term structural plan. It is also divided, with the existence of autonomous systems on the non-interconnected islands. The Ministry also said that connecting the FIT to the SMP could possibly cause further distortions in the market.

It can be seen from the above that the Greek government continues to fully support the feed-in mechanism as the most suitable way to effectively and efficiently promote renewable energies. The use of the fixed FIT, while imperfect in its application, continues to be viewed as preferable over the feed-in premium, at least in the current economic climate, where stability is the key requirement for interments in Greece. As the Ministry begins to implement more structural changes in the tariff scheme, it will become clearer whether the fixed FIT will remain the most suitable scheme for Greece, or whether – in connection with increased transparency in the market and the restructuring of the wholesale energy market – the possibility of using the feed-in premium should be revisited.

Gus J Papamichalopoulos and Dr Sotirios Douklias

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