Risks and prospects for renewable investments in Greece Panagiotis Papastamatiou

RES investments in Greece, within the period of crisis Apart from the crisis, two main events were the main drivers for RES investments: 2011: Record year for wind energy due to its expected long term stability and competiveness in combination with portfolio maturation 2012-2013: Two record years for PVs due to acceleration of their licensing, high motives and penalties in case of connection delay Investments of more than 7,3 bn€ in RES within the years 2008-2014

HWEA Wind Energy Statistics, June 2015 The HWEA Wind Energy Statistics take into account the wind capacity which is in commercial or test operation in Greece and it is based on sources from the market actors.

Portfolios maturation HWEA Wind Energy Statistics, June 2015 Positive 2014 effect Portfolios maturation Switch to PVs 10y average 2005-2014

The hysteresis in wind energy growth in Greece, MW

x Rapid increase of the companies taxation x Return to recession New risks and costs after law 4254/2014, increase LCOE General environment x Increase of the country risk and the risk premiums due to the political developments x Need for new recapitalisation of the banking sector. Capital controls x Rapid increase of the companies taxation x Return to recession x Need for new Memorandum RES sector x Future RES investments to be implement within a less protective environment due to the abandon of FIT + Unknown future rules for the expected market obligations (see next page) x Threats for new taxation on RES plants x New barriers to RES development (obligations for BGs, levies for the production licenses) x Increased risk for high power curtailments (not taken into account be “new deal”) x Increased CAPEX (“difficult” sites) + lower wind sites (not taken into account be “new deal”) x Local acceptance issues Electricity market x Increase of supply’s bad debts due to the recession x A lot of pendencies

No balance responsibility No balance responsibility Roadmap for RES For existing projects under FiT a central body will resume balance responsibility for them; new projects should be balance responsible once ID market becomes liquid Existing RES projects No balance responsibility Proposed Energy Trading Arrangements Introduction of new electricity market design Target market design with well-functioning, liquid Intraday trading ‘New’ RES projects No balance responsibility Balance responsible Greek Market Design: Future Market Design Recommendations December 2014

x Targets hysteresis for wind energy. Need for 600-1000 MW per year What about bidding tenders? The facts x Targets hysteresis for wind energy. Need for 600-1000 MW per year x Long term average: slightly above 150 MW subject to investment security x Limited number of potential investors x Supply’s bad debts The impact x Limited number of eligible projects x High demand – low supply! Danger for strategic bidding x Low realization rate Additional arguments x New deal has already reduced the prices (and retroactively) x Big companies vs small investors x 25%-30% GDR loss within 5 year. Lower risks for investments should be the only option x Special issue for wind energy: tenders will promote projects in eastern country only, against geographical distribution, system security and local acceptability

x Targets hysteresis for wind energy. Need for 600-1000 MW per year. What about bidding tenders? The facts x Targets hysteresis for wind energy. Need for 600-1000 MW per year. x Long term average: slightly above 150 MW subject to investment security x Limited number of potential investor x Supply’s bad debts The impact x Limited number of eligible projects x High demand – low supply! Danger for strategic bidding x Low realization rate Additional arguments x New deal has already reduced the prices (and retroactively) x Big companies vs small investors x 25%-30% GDR loss within 5 year. Lower risks for investments in the only path. x Special issue for wind energy: tenders will promote projects in eastern country only against geographical distribution, system security and local acceptability The conclusion

Discussion x Anything which is not absolutely obligatory by the EU legislation or the MoU III and increases the risk is more than unacceptable. Bidding tenders for the premiums is an example. x How will secure the bankability of the new RES projects as long as their exact market obligations in the future has not been defined in detail? x The future of wind energy is bright. What about wind companies?

Thank you for your attention! Discussion x Anything which is not absolutely obligatory by the EU legislation or the MoU III and increases the risk is more than unacceptable. Bidding tenders for the premiums is an example. x How will secure the bankability of the new RES projects as long as their exact market obligations in the future has not been defined in detail? x The future of wind energy is bright. What about wind companies? Thank you for your attention!